Pakistan-IMF talks near end as $1.2bn tranche hangs in balance

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Fourth economic review talks in final stages, staff-level agreement expected if outstanding issues resolved

Pakistan’s efforts to secure the next $1.2 billion IMF tranche have entered their final stage, as the fourth economic review talks between the government and the International Monetary Fund are nearing completion.

The IMF mission is scheduled to leave today after the current round of negotiations concludes. Finance Ministry officials say the discussions are proceeding in a positive and constructive manner.

According to sources, Finance Ministry officials are optimistic about the outcome of the ongoing IMF negotiations. If the talks conclude successfully, Pakistan and the IMF are expected to reach a staff-level agreement, paving the way for the country’s review to be presented to the IMF Executive Board.

However, if the two sides fail to reach an agreement during the current round, virtual discussions will continue to resolve the remaining outstanding issues.

The IMF delegation is holding meetings with officials from the Finance Ministry, Petroleum Division and Power Division as part of the review process.

The mission is being briefed on several key policy areas, including the auto policy, fuel subsidies, and the proposed deregulation of wheat and sugar.

Officials are also providing updates on gas tariffs and circular debt, two areas that remain important to Pakistan’s energy-sector reforms and IMF commitments.

Once a staff-level agreement is reached, Pakistan’s case will be submitted to the IMF Executive Board for consideration.

Upon approval by the board, Pakistan is expected to receive the next $1.2 billion in financing, comprising $1 billion under the Extended Fund Facility (EFF) and $200 million under the Resilience and Sustainability Facility (RSF).

The ongoing negotiations are being conducted under the fourth review of Pakistan’s EFF programme, according to the Finance Ministry.

At the same time, discussions are also underway for the third review of the climate financing programme, with funds under its third tranche expected upon successful completion of the review process.

The Finance Ministry has said Pakistan would receive the fifth tranche under the EFF programme following the successful conclusion of the talks and subsequent approval.

Pakistan has so far received a combined $4.6 billion under the two programmes, according to the Finance Ministry.

The outcome of the current negotiations will determine the next step in securing the additional financing, with the staff-level agreement and subsequent IMF Executive Board approval forming the key stages before the $1.2 billion tranche can be released.

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