An International Monetary Fund (IMF) mission and Pakistan have made significant progress toward reaching a staff-level agreement for a new extended fund facility (EFF), the global lender said on Friday.
An IMF team, led by mission chief Nathan Porter, ended discussions with authorities on Thursday after arriving in Pakistan on May 13 for consultations on Islamabad’s request for a fresh bailout. In a statement issued after the visit, Porter said the mission and authorities would continue virtual discussion on policy in the coming days to finalize matters, including the financial support needed from the IMF and Islamabad’s bilateral and multilateral partners to achieve necessary economic reforms.
“The authorities’ reform program aims to move Pakistan from economic stabilization to strong, inclusive, and resilient growth,” read the statement, adding Islamabad had informed the mission of plans to strengthen public finances to reduce vulnerabilities by “improving domestic revenue mobilization through fairer taxation while scaling up spending for human capital, social protection, and climate resilience.”
The authorities, read the statement, also plan to “secure energy sector viability, including reforms to reduce the high cost of energy; continue progress towards low and stable inflation by appropriate monetary and exchange rate policies; improve public service provision through state-owned enterprise restructuring and privatization; and promote private sector development, by securing a level-playing field for investment and stronger governance.”
Describing the Islamabad talks as “fruitful,” Porter also praised Pakistani authorities, the private sector, and development partners for their discussions with the mission.
Pakistan is likely to seek at least $6 billion under the new program, as indicated by Finance Minister Muhammad Aurangzeb, and request additional financing from the IMF under the Resilience and Sustainability Trust. The lender has already warned that downside risks for the Pakistani economy remain exceptionally high.