ISLAMABAD: The International Monetary Fund (IMF) has described Pakistan’s implementation of its $7 billion Extended Fund Facility (EFF) as “strong” following the first review of the loan programme.
Pakistan and the IMF have made significant progress towards reaching a Staff-Level Agreement (SLA) on the review.
“The IMF and the Pakistani authorities have made significant progress towards reaching a Staff-Level Agreement (SLA) on the first review under the 37-month Extended Arrangement under the Extended Fund Facility (EFF),” IMF Mission Chief to Pakistan Nathan Porter said in a statement.
An IMF delegation, led by Porter, visited Pakistan from 24 February to 14 March for talks on the first review of Pakistan’s economic programme supported by the EFF, as well as the possibility of a new arrangement under the lender’s Resilience and Sustainability Facility (RSF).
The country’s latest loan programme, secured last year by Prime Minister Shehbaz Sharif’s government, has played a crucial role in stabilising Pakistan’s economy, with the government saying that the nation is on track for long-term recovery.
If the IMF approves the first review, Pakistan is set to receive approximately $1 billion as the second tranche of the loan package.
Emphasising Pakistan’s “strong” implementation of the bailout programme, Porter noted that discussions between the two sides had resulted in significant progress in several key areas.
These include planned fiscal consolidation to sustainably reduce public debt, maintaining a sufficiently tight monetary policy to keep inflation low, accelerating cost-reducing reforms to improve the viability of the energy sector, and implementing structural reforms to drive economic growth while strengthening social protections and increasing health and education spending.
The IMF official also highlighted progress in discussions on Pakistan’s climate reform agenda, aimed at mitigating risks associated with natural disasters.
These reforms could be supported under a potential arrangement within the RSF framework.
Porter’s statement referred to Pakistan’s formal request, made in October 2024, for approximately $1 billion under the Resilience and Sustainability Trust (RST).
Furthermore, he stated that policy discussions between the IMF and Pakistani authorities would continue virtually in the coming days to finalise the agreement.
Following the completion of the first review, Pakistan is anticipating the disbursement of $2.2 billion under the EFF, along with additional climate financing, local media reported on Saturday.
The government expects to receive $1 billion under the $7 billion EFF, with an additional $1 billion to $1.2 billion likely to be approved by the IMF’s Executive Board through the RSF augmentation, bringing total disbursements to approximately $2 billion to $2.2 billion.
The two-week-long talks between Pakistan and the IMF have resulted in a revised macroeconomic and fiscal adjustment framework for the current financial year.
Key macroeconomic indicators, including GDP growth, consumer price index (CPI)-based inflation, and the current account deficit, have also been updated.
