ISLAMABAD (Mudassar Ali Rana) – Pakistan is expected to finalise an agreement with the International Monetary Fund (IMF) soon for the release of the third tranche worth approximately $1.2 billion, according to a senior government official who spoke on condition of anonymity.
The official said that the draft of Memorandum of Economic and Financial Policies contained some stringent conditions, on which the economic team briefed Prime Minister Shehbaz Sharif.
PM Shehbaz directed the team to request the IMF for flexibility during upcoming virtual discussions and to reach consensus on the MEFP.
Sources revealed that delays in reaching a staff level agreement stem mainly from differences over external financing estimates and the pending publication of the Governance and Corruption Diagnostic Report.
The government remains uncertain about publishing the report, which the IMF mission had insisted on releasing during the recent review talks. External financing estimates under the MEFP are still being finalised, but officials expect these matters to be resolved in the coming week. Final damage assessments from last year’s floods will also be shared with the IMF once completed, sources added.
Another senior official noted that there were “no major obstacles” to the staff-level agreement, as most targets had already been agreed upon. Both sides are hopeful of concluding the remaining issues within the next 7 to 15 days.
Finance Minister Muhammad Aurangzeb earlier described the talks with the IMF as positive and productive, expressing optimism that the staff level agreement could be reached at any time, followed by the signing at an appropriate stage.
Following the completion of the review discussions, the IMF mission stated that talks covered the second review under the Extended Fund Facility and the first review under the Resilience and Sustainability Facility. IMF said “significant progress” had been made toward a staff level agreement, acknowledging that Pakistan’s performance under the program remained strong and commitments were being met.
Discussions focused on maintaining fiscal discipline, controlling inflation, restoring the energy sector’s viability and improving governance and transparency.
Mission emphasised the importance of maintaining a tight monetary policy to contain inflation, implementing regular tariff adjustments and reforms in the energy sector and enhancing transparency by reducing the size of state owned enterprises. It also appreciated Pakistan’s efforts on climate resilience and discussed reforms under the ongoing 37-month EFF program as well as the 28-month Climate Resilience Facility.
Sources expect that once remaining technical and financial issues are settled the staff-level agreement between Pakistan and the IMF will be finalized shortly. Finance Minister Muhammad Aurangzeb is scheduled to visit Washington along with his economic team, official sources said. The Finance Minister will meet with the Managing Director of the International Monetary Fund (IMF) and the President of the World Bank during the visit.
He will be accompanied by the Finance Secretary and the Governor of the State Bank of Pakistan. The IMF and World Bank Annual Meetings are scheduled to take place in Washington from October 13 to 18. On the sidelines of these meetings, further policy discussions between Pakistan and the IMF are expected. The FM is also likely to hold meetings with senior officials of the IMF, World Bank, and the International Finance Corporation.