First review of IMF bailout: Govt ‘well positioned’, says finance minister

ISLAMABAD: Pakistan was “well positioned” for the first review of its $7 billion International Monetary Fund bailout programme, the finance minister told Reuters, as talks with the global lender began on Tuesday.

Islamabad secured the $7 billion Extended Fund Facility last summer to help claw its way out of an economic crisis, with an immediate disbursement of about $1 billion.

The review, if cleared and approved by the lender’s board, could unlock another tranche of funding for cash-strapped Pakistan ahead of its annual budget which is usually presented in June.

Pakistan ‘well positioned’ for first review of IMF bailout, says Aurangzeb

The programme has played a key role in stabilising Pakistan’s economy and the government has said the country is on course for a long-term recovery.

“They are here. We will have two rounds of talks, first technical and then policy level,” Finance Minister Muhammad Aurangzeb said.

“I think we are well-positioned” for the review, he said.

Prime Minister Shehbaz Sharif said the economy had stabilised, with all macroeconomic indicators showing positive signs.

“It is not just us saying this…. all international financial institutions whether World Bank or IMF they all are saying it,” he told a gathering in Islamabad.

The English-language Dawn newspaper said the Fund might be concerned about Pakistan failing to meet its tax collection targets, but may overlook the shortfall given positive macroeconomic indicators, including a higher-than-anticipated budget surplus.

“The ongoing review will be critical in determining how the economy moves forward,” the paper said.

Pakistan was running an estimated 600 billion rupee ($2.15 billion) shortfall to meet a 1.3 trillion rupee tax revenue collection target set in its June 2024 budget, said a finance ministry official who asked not to be identified. The IMF team usually spends around two weeks reviewing fiscal reforms and policy.

A separate IMF team was in Pakistan last week to discuss around $1 billion in climate financing on top of the Extended Fund Facility.