IMF in talks with Pakistan for new loan amid economic challenges

The International Monetary Fund (IMF) is poised to initiate crucial discussions with Pakistan this week. Esther Perez Ruiz, the IMF representative, confirmed that a delegation led by Nathan Porter will embark on talks with Pakistani authorities to delve into the prospects of a new loan program.

The primary agenda of these discussions will revolve around forging a robust governance framework aimed at fostering enduring economic stability. Ruiz emphasized that the focus will be on fostering sustainable and inclusive economic growth that extends its benefits to all segments of the Pakistani populace.

Technical experts from the IMF arrived in Pakistan on May 10, geared up for deliberations on both a fresh loan program and budgetary preparations.

However, Pakistan finds itself grappling with significant economic hurdles, notably the setback of a tax amnesty scheme proposed by the IMF.

The government’s pledge to incorporate 3.1 million traders into the tax net under this scheme has fallen short of expectations, casting a shadow over the Federal Board of Revenue (FBR), particularly amid recent changes in senior officials.

These discussions come hot on the heels of Pakistan receiving the long-awaited $1.1 billion final tranche from the IMF under the $3 billion standby arrangement.

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The State Bank of Pakistan (SBP) confirmed the receipt of Special Drawing Rights (SDR) 828 million, equivalent to $1.1 billion, following the successful completion of the second review by the IMF Executive Board under the Standby Arrangement (SBA).

With an eye toward the future, Pakistan is aiming for a new, more substantial IMF loan over an extended period.

Finance Minister Muhammad Aurangzeb has hinted at the possibility of securing a staff-level agreement on the new program by early July.

The proposed loan is anticipated to span at least three years, with the objective of bolstering macroeconomic stability and implementing overdue but necessary structural reforms.

The specifics of the program remain undisclosed, but if realized, it would mark Pakistan’s 24th IMF bailout.