The International Monetary Fund (IMF) mission and Pakistan have made notable progress towards reaching a staff-level agreement for an extended fund facility (EFF), the IMF announced on Friday.
Following the completion of a short-term $3 billion programme last month, which helped Pakistan avoid a sovereign debt default, the IMF has initiated discussions with Islamabad on a new loan programme.
An IMF team, led by mission chief Nathan Porter, concluded in-person discussions with Pakistani authorities on Thursday after arriving in Pakistan on May 13, according to an IMF statement.
“The mission and the authorities will continue policy discussions virtually over the coming days, aiming to finalise discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan’s bilateral and multilateral partners,” Porter said.
The statement highlighted that Pakistan’s reform programme aims to transition the country from economic stabilization to robust, inclusive, and resilient growth.
Pakistani authorities plan to strengthen public finances by improving domestic revenue mobilisation through fairer taxation, while also increasing spending on human capital, social protection, and climate resilience. Other goals include ensuring energy sector viability, reducing energy costs, maintaining low and stable inflation through appropriate monetary and exchange rate policies, improving public service provision via restructuring and privatisation of state-owned enterprises (SOEs), and promoting private sector development by securing a level playing field for investment and enhancing governance.
Porter termed the discussions “fruitful” and confirmed that the IMF and Pakistani authorities would continue policy discussions virtually to finalise the agreement, including securing the necessary financial support from the IMF and Pakistan’s bilateral and multilateral partners.
Pakistan is expected to seek at least $6 billion under the new programme and request additional financing from the IMF under the Resilience and Sustainability Trust.
The IMF has emphasized that prioritizing reforms to rejuvenate the Pakistani economy is more critical than the size of the new loan package being negotiated. Earlier this month, the IMF warned that downside risks for the Pakistani economy remain exceptionally high.
