Pakistan, IMF agree to fiscal reforms amid talks on ninth review

  • Dar says ‘high-level’ committee formed to offset circular debt in gas sector
  • Mission chief says Pakistan would progress on reforms in various sectors to complete programme

ISLAMABAD: Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar on Tuesday began discussions with with IMF review Mission led by IMF Mission Chief Mr Nathan Porter on the country’s economic and fiscal policies and reforms required for completion of the much-delayed ninth review of a $7 billion under Extended Fund Facility (EFF).

Finance Minister Senator Ishaq Dar welcomed the delegation and shared long standing friendly relations with the IMF. He briefed the Mission on fiscal and economic reforms and measures being taken by the Government in different sectors including bridging the fiscal gap, exchange rate stability and in energy sector for the betterment of the economy. He apprised that reforms are being introduced in power sector and a high level committee has been formed for devising modalities to offset the menace of circular debt in gas sector.

IMF resident representative Ms Esther Perez Ruiz, Minister of State for Finance and Revenue Dr Aisha Ghous Pasha, SAPM on Finance Tariq Bajwa, SAPM on Revenue Tariq Mehmood Pasha, Governor State Bank of Pakistan Mr Jamil Ahmed, Secretary Finance, the FBR chairman, members of IMF delegation and senior officers from Finance Division attended the meeting.

During the meeting, both sides discussed and reviewed the economic and fiscal policies and reforms agenda to accomplish the 9th review under the Extended Fund Facility.

The Finance Minister also extended gratitude to the Managing Director of IMF on continuation of talks and shared that as Finance Minister he had successfully completed the IMF programme in the past and that the Government was committed to complete the present programme. He further extended all his support to the Mission and committed to work together for reaching an agreement to complete the 9th review under Extended Fund Facility (EFF).

Mr. Nathan Porter, IMF Mission Chief expressed his confidence that the government will meet the IMF requirements for the completion of the 9th review and hoped that Pakistan would continue towards its progress on the reforms in various sectors and complete the IMF Programme within time effectively. He further added that IMF and Pakistan will be working together on fiscal reforms.

Pakistan entered a $6bn IMF programme in 2019, which was later expanded to $7bn, and the ninth review is currently pending. Talks on the review were originally scheduled to be held in October but kept on facing delays.

The country’s foreign exchange reserves have depleted to $3.7bn, which is not enough to cover even three weeks of imports. In such a situation, Pakistan needs to urgently complete the ninth review, which would not only disburse $1.2bn but also unlock inflows from friendly countries and other multilateral lenders.

Last week, the government removed an unofficial cap on the USD-PKR exchange rate and raised petrol prices — both conditions set by the IMF for talks to move ahead — in an effort to revive the stalled loan programme. The government may have to withdraw energy subsidies to big export industries, besides cutting non-salary, non-essential civil and security costs as part of harsh reforms required to obtain the IMF’s consent for an economic bailout.

The technical discussion would continue till Feb 3. The second phase of policy negotiations would continue till Feb 9 to finalise a memorandum of economic and financial policies.



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