The finance ministry announced on Wednesday that an International Monetary Fund (IMF) mission is set to arrive in Pakistan for the second and final review of a $3 billion standby arrangement. The four-day review is scheduled to commence on Thursday.
Last summer, Islamabad secured the rescue package in a bid to prevent a sovereign default. According to the finance ministry, Pakistan has successfully met all structural benchmarks, qualitative performance criteria, and indicative targets required for the completion of the IMF review.
Upon successful completion of the last review, approximately $1.1 billion will be released as a tranche, as stated by the ministry.
Prime Minister Shehbaz Sharif has directed his finance team, led by newly appointed Finance Minister Muhammad Aurangzeb, to begin preparations for seeking an Extended Fund Facility (EFF) once the standby arrangement expires on April 11.
Aurangzeb informed reporters that the IMF mission would arrive sometime this week, although he did not specify a date. The IMF has indicated its willingness to formulate a medium-term program if Islamabad decides to apply for one. However, the government has not officially disclosed the amount of additional funding it seeks through a successor program from the IMF.
The finance minister expressed the government’s eagerness to initiate discussions on another EFF during the upcoming talks. Further negotiations on the larger and longer program are expected to take place on the sidelines of the IMF and World Bank’s spring meetings in April in Washington.
Aurangzeb emphasized the importance of kick-starting the process during the review and gauging the IMF’s response.
He faces the daunting task of bringing stability to an economy plagued by frequent boom-bust cycles, which have led to over 20 IMF bailout programs in the past. The debt-ridden economy contracted by -0.2 percent last year and is projected to grow by around 2 percent this year. It is grappling with low reserves, a balance of payment crisis, 23 percent inflation, policy interest rates at 22 percent, and record depreciation of the local currency.
