Pakistan Reader# 548, 1 February 2023
On 31 January, a delegation led by IMF Mission Chief Nathan Porter held a meeting with Finance Minister Ishaq Dar and other ministers in Islamabad. During the meeting, they discussed Pakistan’s economic and fiscal policies and the reforms required to complete the ninth review of a USD seven billion loan programme. In a press release, the finance ministry stated that in the meeting FM Dar briefed the delegation about the government’s fiscal and economic reforms in various sectors, including energy, and measures to bridge the fiscal gap and stabilise the exchange rate. Additionally, FM Dar also told the IMF that reforms were being introduced in the power sector and a “high-level committee has been formed for devising modalities to offset the menace of circular debt in the gas sector.” He assured the IMF that Pakistan would complete the ongoing programme and was committed to working together to reach an agreement to complete the ninth review under the Extended Fund Facility (EFF).
IMF calls for political consensus for the revival of USD 6.5 billion bailout
According to The Express Tribune, the IMF Mission Chief raised questions about the opposition’s role in the economic decisions that need to be made for Pakistan. He expressed concerns over the possibility of the opposition hindering the implementation of tough economic decisions. In this regard, he urged the government to meet all the “requirements” for the completion of the much-delayed programme review.
IMF demands ‘strict action’ to bridge growing fiscal gap
The IMF urged the Pakistani authorities to work towards bridging the gap on account of fiscal slippages in order to restrict the primary deficit within the envisaged limits. The IMF also raised the possibility of the upcoming Presidential Ordinance landing at the higher judiciary, risking extra tax revenues. In this regard, FM Dar assured the IMF that the Presidential Ordinance would be ultimately laid down before the parliament, claiming to believe in the supremacy of parliament.
Pakistan’s IMF journey
Pakistan entered a USD six billion IMF programme in 2019. This was later expanded to USD seven billion. Currently, around USD 3.5 billion of the USD 6.5 billion total packages are yet to be disbursed. The disbarment is currently stalled as Pakistan is unable to complete the ninth review, which according was initially scheduled to be completed in the first week of November 2022. However, the talks kept facing delays. The ongoing technical discussion would continue till 3 February, following which the second phase of policy negotiations would continue till 9 February to finalise a memorandum of economic and financial policies.
“Govt, IMF discuss policies, reforms required to complete 9th review,” Dawn, 1 February 2023
Khaleeq Kiani, “Govt rolls out first measures as IMF mission begins talks,” Dawn, 1 February 2023
Shahbaz Rana, “IMF seeks political consensus for revival of $6.5b bailout,” The Express Tribune, 1 February 2023
Mehtab Haider, “IMF demands ‘strict action’ to bridge growing fiscal gap,” The Express Tribune, 1 February 2023