The second and last review of Pakistan’s $3 billion standby agreement with the IMF was initiated on Thursday by the finance ministry and an IMF delegation.
Declaring that “Pakistan has met all structural benchmarks, qualitative performance criteria, and indicative targets for successful completion of the IMF review,” the ministry had announced a day earlier that the review would take place over four days and that it was hoped for an agreement at the staff level of the IMF to follow the assessment.
The ministry had stated that if the final review is successful, a tranche of about $1.1 billion will be released. To prevent a sovereign default, Islamabad has obtained the last-minute rescue package last summer.
According to a news release from the ministry, Finance Minister Muhammad Aurangzeb was visited today by a delegation headed by Nathan Porter, the IMF mission chief for Pakistan, to carry out the second evaluation.
The government’s commitment to collaborating with the IMF on a reform program for the nation’s economic growth and stability was conveyed by the finance minister as he greeted the group.
According to the press release, the parties discussed general macroeconomic indicators, government initiatives for budgetary consolidation, structural changes, the viability of the energy sector, and the governance of state-owned businesses.
Aurangzeb wished for successful meetings at the second review and thanked the IMF for its ongoing support.
Pakistan is looking for a new Extended Fund Facility.
When the standby agreement expires on April 11, Prime Minister Shehbaz Sharif has already instructed his finance staff to start looking for an Extended Fund Facility (EFF).
If Islamabad applies for a medium-term program, the lender has stated that it will create one. The amount of additional funds the government is requesting from the fund through a successor program has not been made public.
The finance minister had earlier stated that Islamabad would be “very keen to start discussions on another EFF with them during these talks” and that additional discussions on the larger, longer program would be pursued outside of the IMF and World Bank’s spring meetings in Washington, D.C., in April.
Selected over a field of contenders that included Ishaq Dar, a former finance minister four times, Aurangzeb will have to provide stability to a nation beset by debilitating boom-bust cycles that have previously resulted in over 20 IMF bailout programs.
The heavily indebted economy has been under tremendous strain due to inadequate reserves, a balance of payments crisis, 23 percent inflation, 22 percent policy interest rates, and record local currency depreciation. The GDP fell by -0.2 percent last year and is predicted to rise by about 2 percent this year.
