IMF, Pakistan wrap up unscheduled talks on $7 billion bailout

2024-11-16T09:52:12Z

WASHINGTON (Reuters) – The International Monetary Fund (IMF) said on Friday it held constructive talks with authorities in Pakistan on economic policy and reform efforts to reduce vulnerabilities during an unscheduled staff visit.

The unusual visit from Nov 12 to Nov 15 discussed a $7-billion bailout within six weeks of its approval by the IMF board, but came too early for the first review of the Extended Fund Facility (EFF), due in the first quarter of 2025.

“We are encouraged by the authorities’ reaffirmed commitment to the economic reforms supported by the 2024 EFF,” Nathan Porter, the chief of the IMF’s Pakistan mission, who led the talks, said in a statement.

The constructive discussions on economic policy and reform efforts to reduce vulnerabilities would help to lay the basis for stronger and sustainable growth, he added.

The mission did not state the weaknesses, but sources in Pakistan’s finance ministry have said some major lapses prompted the IMF to intervene.

Among these were a shortfall of nearly 190 billion rupees ($685 million) in revenue collection during the first quarter of the current fiscal year.

The period also saw an external financing gap of $2.5 billion, while Pakistan failed in the bid to sell its national airline, a major setback on the path to privatising loss-making state-owned enterprises, required by the IMF.

Losses running into billions of dollars in the power and gas sector, the main hole in the economy, were also discussed, the IMF said, adding that structural energy reforms were critical to restore the sector’s viability.

Both sides agreed on the need to continue prudent fiscal and monetary policies, and mobilise revenue from untapped tax bases, the mission added.

Pakistan has struggled for decades with boom-and-bust economic cycles, prompting 23 IMF bailouts for the South Asian nation since 1958.

(Reporting by Jasper Ward in Washington and Asif Shahzad in Islamabad; Editing by Leslie Adler and Clarence Fernandez)

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