A mission of the International Monetary Fund (IMF) is expected to visit Pakistan this month to discuss a potential new, “long-term and more substantial” loan programme. The initiative aims to assist the government in managing its debt repayments, which amount to billions this year, local media reported on Wednesday.
Pakistan and the IMF have arranged talks regarding this prospective loan programme. These discussions will be conducted in two phases, beginning with technical-level deliberations followed by policy-level negotiations.
As Pakistan confronts significant economic hurdles leading up to these discussions, challenges include the failure of a Tax Amnesty scheme proposed by the IMF.
The scheme aimed to bring 3.1 million traders into the tax net but has proven unsuccessful thus far. The Federal Board of Revenue (FBR) is grappling with an unprecedented situation following recent changes in senior officials.
The relatively new and less experienced FBR team faces the task of negotiating with the IMF, posing a notable challenge. The IMF is also likely concerned about the recent decline in tax collections by the FBR.
Additionally, the failure to achieve the targeted primary Budget surplus in the first nine months will be a key topic during the talks, as per sources.
This development follows Pakistan’s receipt of the long-awaited final tranche of US$ 1.1 billion from the IMF, marking the completion of the US$ 3 billion standby arrangement. The State Bank of Pakistan confirmed receiving Special Drawing Rights of 828 million, equivalent to US$ 1.1 billion, following the successful completion of the IMF Executive Board’s second review under the Stand-By Arrangement.
Finance Minister Muhammad Aurangzeb has expressed optimism that Islamabad could reach a staff-level agreement on the new programme by early July. The government asserts that a loan spanning at least three years is essential to promote macroeconomic stability and implement overdue and challenging structural reforms, although details regarding the scale of the programme remain undisclosed. If secured, it would mark Pakistan’s 24th IMF bailout. (WE News)
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