An International Monetary Fund (IMF) mission is set to arrive in Pakistan this week for a pivotal second and final review of the country’s $3 billion standby arrangement, according to sources familiar with the matter.
The four-day review is scheduled to commence on Thursday, as confirmed by two officials from the finance ministry who spoke on condition of anonymity due to the sensitive nature of the discussions.
Last summer, Islamabad secured the emergency rescue package worth $3 billion to prevent a sovereign default. The successful completion of this final review is expected to unlock a tranche of approximately $1.1 billion.
Prime Minister Shehbaz Sharif has directed his finance team, led by newly appointed Finance Minister Muhammad Aurangzeb, to begin preparations for seeking an Extended Fund Facility (EFF) once the standby arrangement concludes on April 11.
Speaking to reporters, Aurangzeb confirmed the imminent arrival of the IMF team for this week’s review, although he did not specify the exact date. He mentioned that the IMF has indicated it would consider formulating a medium-term program if Pakistan submits an application.
“We are very keen to commence discussions on another EFF during these talks,” stated the finance minister. He added that further negotiations regarding the broader, longer-term program would likely take place during the IMF and World Bank’s spring meetings in April, scheduled to be held in Washington.
“We aim to at least initiate the process during this review and gauge their response,” Aurangzeb remarked.
Appointed over other contenders, including former four-time finance minister Ishaq Dar, Aurangzeb faces the challenging task of stabilizing Pakistan’s economy, which has been marred by severe boom-bust cycles. These cycles have led to more than 20 IMF bailout programs in the past.
Pakistan’s debt-ridden economy contracted by -0.2 percent last year and is forecasted to achieve a modest growth of around 2 percent this year. The nation is grappling with low reserves, a balance of payment crisis, soaring inflation at 23 percent, policy interest rates at 22 percent, and a record depreciation of the local currency.
The upcoming review by the IMF holds significant implications for Pakistan’s economic future, as it seeks to navigate through these challenging financial conditions. Further updates are expected as the discussions progress during the mission’s visit.
