After introductory meeting, IMF stresses political stability for economic stability

The introductory session for a new loan program between Pakistan and the International Monetary Fund (IMF) concluded on Monday, marking the beginning of negotiations aimed at securing a bailout package to support the country's economic reforms.

Following the introductory meeting, the IMF delegation departed from the Ministry of Finance, where discussions were held regarding a new loan program and the upcoming budget for the new financial year.

Sources said that the IMF has emphasized ensuring political stability for economic stability, as the visiting delegation gears up to meet Prime Minister Shehbaz Sharif next week at the end of the policy-level talks. 

The mission will discuss with the PM the assurance of targets in the new loan programme as well as the continuation of strict economic policies. The IMF mission is also expected to meet with important leaders of main political parties. 

Led by Mission Chief Nathan Porter, the IMF delegation initiated on Monday morning the introductory session with Pakistan's economic team, headed by Finance Minister Muhammad Aurangzeb. The consultations, expected to last approximately two weeks, aim to cover a new loan programme as well as the budget for the new financial year.

Pakistan is expecting a substantial bailout package of over $6 billion from the IMF to bolster its economy and address pressing fiscal concerns. Sources say the Finance Ministry's economic team had diligently prepared for the negotiations, ensuring all the necessary groundwork is in place for fruitful discussions. 

During Monday's meeting, Pakistan assured the IMF of maintaining the process of economic reforms. The IMF expressed appreciation for the progress made in the reforms during the previous loan program, acknowledging Pakistan's efforts to enact policy reforms and improve economic governance. 

The IMF team is also scheduled to hold talks with State Bank of Pakistan officials today, while negotiations have also been scheduled with the Finance Ministry, the Federal Bureau of Revenue, and Energy Ministry officials. 

During the ongoing negotiations, new budget targets and economic policies would be discussed between the two sides, while the IMF has emphasized speeding up the process of economic reforms for sustainable development, sources said. 

Key agenda items of today's meeting included deliberations on the Extended Fund Facility loan program, for which a comprehensive working paper was prepared by the Finance Ministry. Additionally, the two dozen-member IMF mission will engage in consultations regarding the formulation of the national budget for the upcoming financial year.

On Sunday, the IMF's resident representative in Pakistan, Esther Perez Ruiz, confirmed that a mission of the Fund will hold talks with Pakistani officials on a new loan programme next week. According to Ruiz, the purpose of the negotiations is to lay the foundation for better and stronger governance. The IMF representative said that the parties will also discuss sustainable economic development, which will benefit all Pakistanis.  

Also Read: IMF concerned over political uncertainty in Pakistan despite elections

Also on Sunday, Finance Minister Muhammad Aurangzeb said the government would provide all facilities, but not back down from expanding the tax net.

"We are moving towards complete digitalization; it will increase revenues and also bring transparency," he said further. Addressing a pre-budget conference in Lahore, the minister said there was a need for structural reforms, adding that a lot of reforms had to be carried out regarding tax-to-GDP, energy and privatization issues. 

The International Monetary Fund (IMF) has also raised concerns over persistent political uncertainty in Pakistan despite the February 8 elections, emphasizing potential implications for economic reforms. Despite the formation of a new government, the IMF highlighted challenges in implementing policy reforms amidst a complex political landscape.

According to the IMF, the new government has pledged to uphold policies outlined in the standby arrangement. However, the IMF cautioned that complications arising from political instability, inflation, and social tensions could hinder reform implementation.