AN IMF mission is in Islamabad for unusual, early talks with the Pakistani authorities as the lender seems worried over the government missing critical targets and veering off the course charted for the country under its $7bn funding programme. The first of the six biannual performance reviews was not due until the first quarter of 2025, before the scheduled release of the second tranche in March. But, given the IMF’s anxiety over the programme’s implementation, the move to accelerate the first review of the nation’s finances amid a growing shortfall in tax collection is understandable. Finance ministry officials, on their part, according to media reports, have insisted that the discussions with the Fund are not part of the first performance review. Apart from discussing the country’s fiscal deficit amid huge tax collection slippages of Rs190bn between July and October, the mission will evaluate progress on the measure to arrange $2.5bn to fill the external financing gap for FY25, the plan to tax retailers and agriculture, SOE privatisation, which has experienced a setback after the failed attempt to sell PIA, and the shortfall in provincial cash surplus thanks to Punjab’s questionable spending on power subsidies and energy sector reforms in the face of growing losses.

It is too early to say anything about the outcome of the unplanned programme evaluation, even if it is not a full review, and is just a precursor to the actual one in the next few months. Yet, it is clear that the IMF would not want to shut down the funding programme or impose new stringent conditions and set additional goals at this stage. An account of the outcome of deliberations on the first day of talks suggests that even Islamabad prefers to suppress its strong urge to request the lender to scale down taxes or change other loan targets. The unusual visit also makes it abundantly clear that the lender will closely watch implementation of the programme goals to prevent it from derailing, as pointed out in this space a few times in the recent past. If Pakistan wants a continuation of funding under the programme, the government will have to walk the talk it has done in the last nine months. Any further dilly-dallying on reforms agreed under the bailout will only hurt the common people. The Fund itself has nothing to lose.

Published in Dawn, November 13th, 2024