IMF expresses satisfaction with Pakistan's economic measures, use of loan

An IMF mission after a key visit to Pakistan acknowledged that the country achieved a strong implementation of the $7 billion loan programme agreed upon last year, it emerged on Saturday.

The International Monetary Fund (IMF) delegation led by Nathan Porter visited Islamabad and Karachi from February 24 to March 14 to undertake the First Review for the 37-month extended arrangement under the Extended Fund Facility (EFF) and on discussions for an arrangement of a fresh loan under the Resilience and Sustainability Facility (RSF).

The team held discussions on the first review of Pakistan's economic programme supported by the EFF and on a possible new arrangement under the RSF, according a statement issued by Nathan Porter at the conclusion of the visit on Friday.

He said that the IMF and the Pakistani authorities made significant progress toward reaching a Staff Level Agreement (SLA) on the first review of the EFF.

Programme implementation has been strong, and the discussions have made considerable progress in several areas including the planned fiscal consolidation to durably reduce public debt, maintenance of sufficiently tight monetary policy to maintain low inflation, acceleration of cost-reducing reforms to improve energy sector viability, and implementation of Pakistan's structural reform agenda to accelerate growth while strengthening social protection and rebuilding health and education spending, he said.

Progress has also been made in discussions on the authorities' climate reform agenda, which aims to reduce vulnerabilities from natural disasters-related risks, and accompanying reforms which could be supported under a possible arrangement under the Resilience and Sustainability Facility (RSF).

He said that the mission and the authorities will continue policy discussions virtually to finalize these discussions over the coming days.

Sources in Pakistan said that it was hoped that the positive statement by the fund will help the country to get the $1 billion second tranche under the EFF.

They said talks were also going on for about $1.5 billion additional loan under the Resilience and Sustainability Facility (RSF).

Pakistan joined the IMF in 1950 and so far has availed 25 arrangements from the global lender, but unable to undertake massive structural reform as often dictated by the fund to stabilize its economy on a long-term basis.

The Fund has played a key role in helping the country to meet balance of payment challenges on several occasions, including timely help to avoid a possible default in 2023-24.