Pakistan and the International Monetary Fund (IMF) are set to begin formal negotiations today for the fourth review of the $7 billion Extended Fund Facility (EFF) and the third review of the Resilience and Sustainability Facility (RSF). Successful completion of both reviews could unlock around $1.2 billion in new financing for Pakistan.
The IMF staff mission, led by Iva Petrova, is expected to stay in Pakistan for nearly two weeks. Discussions are likely to continue into the first week of October as both sides review the country’s progress under the ongoing 37-month IMF program.
If the reviews are completed successfully, Pakistan could receive around $1 billion under the EFF and another $200 million through the RSF. The funds could be released by the end of November or early December, subject to approval and completion of the required procedures.
The IMF program is focused on stabilising Pakistan’s economy through fiscal discipline, structural reforms and measures aimed at supporting sustainable economic growth. The latest review will assess Pakistan’s progress on several commitments agreed under the program.
During the negotiations, Pakistani authorities are expected to brief the IMF on the Sovereign Wealth Fund, efforts to reduce circular debt, the sugar sector and the government’s position on its deregulation. Discussions will also cover the current account balance, primary surplus, foreign exchange reserves and the exchange rate.
The Federal Board of Revenue (FBR) will hold discussions with the IMF on measures to expand the tax base and implement tax reforms. The provinces are also expected to present their plans for improving tax and non-tax revenue collection.
Energy sector reforms will be another major part of the discussions. The Ministry of Energy is expected to provide an update on circular debt and ongoing efforts to improve the performance of the power and energy sectors.
The IMF is also expected to review measures related to preventing money laundering and terrorist financing. The National Accountability Bureau and Federal Investigation Agency are expected to brief the Fund on relevant measures being implemented in Pakistan.
The talks come as the government continues working to meet outstanding conditions under the IMF program. Pakistani authorities have previously maintained that overall implementation of the program remains strong, although some commitments have faced delays.
Issues including sugar sector liberalisation, health and education spending and certain structural reforms remain among the areas being monitored.
The outcome of the latest negotiations will determine whether Pakistan meets the requirements for the next disbursements under the EFF and RSF. Both sides are expected to review economic data and policy measures before reaching a conclusion on the latest program reviews.
