Pakistan is “well positioned” for the first review of its $7 billion bailout program with the International Monetary Fund (IMF), according to the country’s Finance Minister, Muhammad Aurangzeb. The review talks, which commenced on Tuesday, are a crucial step in Pakistan’s efforts to stabilize its economy and ensure that the government remains on track with the conditions set out under the IMF’s Extended Fund Facility (EFF). This program, secured by Pakistan last summer, is seen as vital for the country’s long-term economic recovery after facing a severe financial crisis.
In an exclusive statement to Reuters, Finance Minister Aurangzeb expressed confidence that the country would pass the review, adding that Pakistan had made significant progress since securing the IMF bailout. “They are here. We will have two rounds of talks, first technical and then policy level,” he said. “I think we are well positioned” for the review, he added, signaling optimism that Pakistan’s economic performance would be deemed satisfactory by IMF officials.
The IMF mission, led by Nathan Porter, began its talks with Pakistani authorities on Monday, as part of the first review of the $7 billion EFF program. The talks will unfold in two phases. The first phase will focus on technical negotiations, while the second phase will delve into policy-level discussions. The Ministry of Finance shared images of the kick-off meeting, which showed Aurangzeb and other key officials engaged in talks with the IMF delegation. However, further details were not disclosed.
According to a statement from the Ministry of Finance, the meeting marked the formal start of discussions between Pakistan’s economic team and the IMF delegation. The mission, which consists of nine members, will stay in Pakistan for approximately two weeks. During this period, it will evaluate the country’s economic performance between July and December 2024, assessing key indicators such as fiscal policies, monetary strategies, and structural reforms. A successful review would unlock the next $1 billion tranche of the IMF loan, providing much-needed financial support to Pakistan.
The review is seen as an important benchmark for Pakistan’s economic trajectory, as the IMF bailout is critical in stabilizing the country’s finances. Islamabad has expressed its commitment to fulfilling the terms of the agreement and pushing forward with necessary reforms, including tackling inflation, improving fiscal discipline, and implementing structural changes in key sectors.
One of the focal points of the ongoing talks will be the budget for the fiscal year 2025-26, which is currently under formulation. Sources within the Finance Ministry revealed that the IMF team will examine the proposed budget in detail as part of the discussions. Additionally, the IMF will meet with various government institutions, including the Ministry of Finance, the Ministry of Energy, the Planning Commission, the State Bank of Pakistan (SBP), the Federal Board of Revenue (FBR), the Oil and Gas Regulatory Authority (OGRA), and the National Electric Power Regulatory Authority (NEPRA). Separate meetings will also be held with representatives from provincial governments, including those from Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan.
The outcome of these talks will determine whether Pakistan successfully qualifies for the next phase of the IMF program, which could provide crucial funding to address the country’s ongoing financial challenges. As Pakistan navigates this important phase, the government remains hopeful that its performance will meet the IMF’s expectations, paving the way for sustained economic recovery in the years to come.
With the next tranche of funding potentially unlocking up to $1 billion, the review process will play a significant role in shaping Pakistan’s financial future and its relations with international lenders.