IMF Acknowledges Pakistan's Satisfactory Economic Implementation

The IMF delegation, headed by Nathan Porter, visited Islamabad and Karachi from February 24 to March 14 for the First Review of the 37-month extended arrangement under the Extended Fund Facility

An International Monetary Fund (IMF) mission, following a crucial visit to Pakistan, has acknowledged the country’s strong progress in implementing the $7 billion loan program agreed upon last year, according to reports released on Saturday.

The IMF delegation, headed by Nathan Porter, visited Islamabad and Karachi from February 24 to March 14 for the First Review of the 37-month extended arrangement under the Extended Fund Facility (EFF). They also held discussions regarding a potential new loan arrangement under the Resilience and Sustainability Facility (RSF), according to a PTI report.

The team focused on reviewing Pakistan’s economic program supported by the EFF and explored the possibility of a new arrangement under the RSF, as stated by Nathan Porter at the conclusion of the visit on Friday, as per the report.

Progress In Several Areas

He stated that the IMF and Pakistani authorities had made significant progress in reaching a Staff Level Agreement (SLA) on the first review of the EFF. "Programme implementation has been strong, and the discussions have made considerable progress in several areas including the planned fiscal consolidation to durably reduce public debt, maintenance of sufficiently tight monetary policy to maintain low inflation, acceleration of cost-reducing reforms to improve energy sector viability, and implementation of Pakistan’s structural reform agenda to accelerate growth while strengthening social protection and rebuilding health and education spending," he explained.

"Progress has also been made in discussions on the authorities’ climate reform agenda, which aims to reduce vulnerabilities from natural disasters-related risks, and accompanying reforms which could be supported under a possible arrangement under the RSF," he said. 

He added that the mission and authorities would continue their policy discussions virtually in the coming days to finalise these talks. Sources in the report indicated that the positive statement from the IMF is expected to help the country secure the $1 billion second tranche under the EFF.

They mentioned that discussions were also ongoing for an additional loan of around $1.5 billion under the RSF.

Pakistan became a member of the IMF in 1950 and has since entered into 25 agreements with the global lender. However, the country has struggled to implement significant structural reforms, which are often required by the IMF to stabilise its economy in the long term.