Pakistan on Thursday “expressed its intention” for a fresh loan from the International Monetary Fund (IMF) as the two sides began the final review meeting on the $3 billion stand-by arrangement (SBA).
The four-day review began today, and if successful, will release a final tranche of around $1.1 billion secured by Islamabad under a last-gasp rescue package last summer, averting a sovereign debt default.
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The IMF review mission, headed by Nathan Porter, would hold further talks with Pakistani authorities on the new loan programme, the sources said.
During the meeting, the Fund delegation congratulated Muhammad Aurangzeb on assuming the office of the finance minister.
Meanwhile, Aurangzeb expressed his commitment for making a positive progress with the lender, the sources said, adding that the IMF team appreciated the caretaker government’s efforts in implementing the programme.
The sources said that the finance minister agreed to continue the economic reforms.
“Pakistan assured the IMF mission of implementing all priority points,” the sources added.
The government also presented a plan to the delegation seeking to increase the Federal Board of Revenue (FBR)’s revenues and reduction in circular debt.
Earlier, the finance ministry said that Pakistan has met all structural benchmarks, qualitative performance criteria and indicative targets for successful completion of the IMF review.
The ministry hoped for a successful IMF staff level agreement after the appraisal.
Large, long programme
On Tuesday, Finance Minister Muhammad Aurangzeb shared that the government would engage with the Washington-based lender for a “large and long programme” under the Extended Fund Facility (EFF).
In his first media briefing after assuming charge, the newly appointed minister laid out his plan for economic stabilisation.
The minister also hinted at the reduction in the policy rate but added that the Monetary Policy Committee (MPC) is the domain of the State Bank of Pakistan (SBP), which currently enjoys autonomy.
In the post-EFF agreement with the IMF, he said, Pakistan would fetch foreign inflows through commercial financing and launching international bonds.
“The Special Investment Facilitation Cell is an important platform to bring equity and investment from abroad,” the minister said.
He added that the era of securing deposits and rollover from friendly and bilateral partners is over, so viable and bankable projects will have to be put on the table.
All options, including the augmentation of the IMF programme through climate financing and jacking up the size of allocated quota under the EFF programme, will be explored during the upcoming negotiations with the IMF review mission scheduled to be commenced soon, Muhammad Aurangzeb said.
He conceded that there was a trust deficit owing to which the IMF always proposed front-loaded programmes as they knew that after passing through the first or two reviews and getting money, we would run away from implementing the remaining programme.
