ISLAMABAD: Despite a couple of hitches, talks are due to begin in Dubai on Jan 26 for the tenth review of the $6.64 billion International Monetary Fund (IMF) bailout package for Pakistan.

A senior government official told Dawn that the government had missed a major benchmark for the upcoming review, since it was required to invite investors to bid for Pakistan International Airlines (PIA) by Dec 31, 2015.

In addition, the government was cautiously hopeful of achieving its end-December target for net domestic assets as the numbers continued to flow in and the situation became clearer after the year-end holidays. “This would be a key area to watch over the next couple of days because slipping on this count would require a waiver and invite the ire of IMF board members,” he said.

Apart from these two issues, the government has met nearly all performance targets. More importantly, authorities have been able to meet power sector benchmark targets – both in terms of reducing line losses and bill collection – for end-December as required under the tenth review, even though the fund had been calling on authorities to move vigorously towards structural reforms in the power sector.

The official said the government had already “over-performed” on its tax collection target for the second quarter (Sept-Dec) following the imposition of Rs40 billion in additional tax measures in early October, a move that would continue to yield revenue over the year.

Officials said the government was also comfortable with the legal requirement of a gas price increase with effect from Jan 1, 2016 because of regulatory process. They said the Oil and Gas Regulatory Authority (Ogra) was still in the process of finalising its determination on gas price adjustment for end consumers after clearing a three-year backlog, completing its yearly determination for FY2012-13, FY2013-14 and FY2015-16.

It was in this background that Finance Minister Ishaq Dar chaired a meeting to oversee preparations for the upcoming review. The successful completion of talks is a condition for the disbursement of the next tranche of about $500 million.

An official statement said Finance Secretary Dr Waqar Masood Khan conducted an overview progress of various reform measures, including the status of actions relating to performance criteria and indicative targets.

“The minister expressed satisfaction with the second quarter results, as well as the overall progress made since the ninth review and directed that the positive momentum should be maintained for the remainder of the fiscal year,” the statement said.

He said the reforms agreed under the programme had been helpful in achieving macroeconomic stability and the process should be accelerated so that the gains made during the last two and a half years were consolidated.

Following political pressure, mostly from opposition parties and workers’ unions, the government had slowed down PIA’s privatisation process, even though it had completed the legal formalities required to offload major stakes in the national flag carrier. The government has been extending deadlines for PIA’s sale since December 2014.

The government has already delayed the sale of other loss-making entities – mostly in the power sector – in consultation with the IMF.

Published in Dawn, January 5th, 2016