Pakistan's Premier Multilingual News Agency

IMF delegation to arrive in May to complete the next program

Islamabad, 2 May 2024, (GNP): A group from the International Monetary Fund (IMF) is expected to arrive in Pakistan in mid-May to iron out the specifics of Islamabad’s upcoming financial assistance plan, which falls under the Extended Fund Facility (EFF) totaling $6 to $8 billion.

According to reports, during their approximately two-week stay in the country, the IMF team will outline the macroeconomic and fiscal framework for the next three to four years.

The government is anticipated to present the upcoming budget for the fiscal year 2024-2025 around June 6 or 7 before parliament, with potential implementation of strict measures aimed at achieving fiscal stability, as per the report.

The development follows shortly after Pakistan formally requested assistance from the Fund last month, seeking the next bailout package, with potential augmentation through climate financing.

“We expect the IMF mission to be in Islamabad around the middle of May — and that is when some of these contours will start developing,” Finance Minister Muhammad Aurangzeb had told Reuters after meeting IMF’s Managing Director Kristalina Georgieva last month.

The precise size and duration of the bailout will only be established once a consensus on the key aspects of the next program is reached in May 2024.

Additionally, Jihad Azour, the IMF’s Middle East and Central Asia Director, stated in April that the Fund is prepared to assist Pakistan, emphasizing that the package of reforms is now of greater significance than the scale of the new program.

Also Read: IMF likely to approve Pakistan’s $1.1bn tranche today

“I think what is important at this stage is to accelerate the reforms, double down on the structure of reforms in order to provide Pakistan with its full potential of growth,” Azour told a press conference on the sidelines of the IMF 2024 Spring meetings

Last week, Prime Minister Shehbaz Sharif met with Georgieva on the sidelines of the World Economic Forum Special Meeting in Riyadh.

During the meeting, both parties discussed the possibility of Pakistan entering into another IMF program to solidify the gains made in the past year and ensure a positive economic growth trajectory.

This meeting followed the disbursement of SDR 828 million (approximately $1.1 billion) by the IMF as part of the third and final tranche under the $3 billion Stand-By Arrangement (SBA) with Pakistan, which the country secured last summer to prevent a sovereign default.

It’s worth noting that the Federal Bureau of Revenue (FBR) is considering including monthly pensions of Rs100,000 in the tax net, with another proposal suggesting imposing a flat rate of 10% on taxable pension amounts above a certain ceiling.

Although the primary surplus has remained positive, the overall fiscal balance has been deteriorating, with net revenue receipts failing to meet debt servicing requirements, which constitute the largest expenditure item.

With the IMF expected to propose significant taxation measures and substantial expenditure cuts to achieve fiscal consolidation, Islamabad is likely to request augmentation through climate finance, similar to Bangladesh, to increase the size of the loan program. Egypt’s program size was also increased to $8 billion.