Finance ministry, IMF begin second review of Pakistan’s standby arrangement

Published March 14, 2024
Finance Minister Muhammad Aurangzeb and his team begin the second review of Pakistan’s standby arrangement with an IMF delegation on Thursday. — Ministry of Finance
Finance Minister Muhammad Aurangzeb and his team begin the second review of Pakistan’s standby arrangement with an IMF delegation on Thursday. — Ministry of Finance

The finance ministry and a delegation of the International Monetary Fund (IMF) on Thursday kicked off the second and last review of Pakistan’s $3 billion standby arrangement with the body.

The ministry had said a day ago the review would be a four-day affair and hoped for a for a successful IMF staff-level agreement after the appraisal, saying that “Pakistan has met all structural benchmarks, qualitative performance criteria and indicative targets for successful completion of the IMF review.”

The last review, if successful, will release a tranche of around $1.1 billion, the ministry had said. Islamabad had secured the last-gasped rescue package last summer to avert a sovereign default.

A press release issued by the ministry today said a delegation led by IMF mission chief for Pakistan Nathan Porter called on Finance Minister Muhammad Aurangzeb today to conduct the second review.

The finance minister welcomed the delegation and expressed the government’s commitment to working with the IMF on a reform agenda for the country’s economic growth and stability.

The press release said discussions were held between both sides on overall macroeconomic indicators, government efforts on fiscal consolidation, structural reforms, energy sector viability and governance of state-owned enterprises.

Aurangzeb thanked the IMF for its continued support and hoped for productive meetings in the second review.

Pakistan seeking new Extended Fund Facility

Prime Minister Shehbaz Sharif has already directed his finance team to initiate work on seeking an Extended Fund Facility (EFF) after the standby arrangement expires on April 11.

The lender has said it will formulate a medium-term programme if Islamabad applies for one. The government has not officially stated the size of the additional funding it is seeking through a successor programme from the fund.

Islamabad will be “very keen to start discussions on another EFF with them during these talks,” the finance minister had previously said, adding that further negotiations on the larger, longer programme would be taken forward on the sidelines of the IMF and World Bank’s spring meetings in April in Washington.

Aurangzeb, who was picked over several other aspirants, including former four-time finance minister Ishaq Dar, has to bring stability to a country plagued by crippling boom-bust cycles that have in past led to more than 20 IMF bailout programmes.

The debt-ridden economy, which shrank -0.2 per cent last year and is expected to grow around 2pc this year, has been under extreme stress with low reserves, a balance of payment crisis, inflation at 23pc, policy interest rates at 22pc and record local currency depreciation.

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