Finance Minister Muhammad Aurangzeb on Wednesday said that talks with the International Monetary Fund (IMF) were headed in the “right direction”.
An IMF mission led by Iva Petrova held a formal kick-off meeting with Pakistan’s economic team to review the implementation of the EFF and RSF. The programme’s performance as of the end of June this year — the period under review — has been mixed.
The start of the next review period, ending December this year, has also been off the mark, particularly in revenue collection. The two sides now have to agree on corrective measures during their dialogue to meet the next biannual targets.
Today, Aurangzeb spoke to reporters as he left a meeting of the Senate Standing Committee on Finance and Revenue in Islamabad. The minister told reporters that the $7.1 billion Extended Fund Facility (EFF) and the $1.1bn Resilience and Sustainability Facility (RSF) were being reviewed.
“So far, so good,” he said. The EFF is undergoing its second review, while the RSF is being reviewed for the first time.
When asked about the reviews and whether they will conclude by October 8, Aurangzeb said: “Whatever discussions are happening, they are moving in the right direction.”
Additionally, Aurangzeb also spoke about the Federal Board of Revenue (FBR) recording a shortfall of Rs198bn in the first quarter of the fiscal year.
“We want to get FBR tax to gross domestic product (GDP) of 11 per cent by the end of this fiscal year,” he said. “We want to remain very committed to that target. As you know, there are certain pending court cases … let’s see how the court decides and that can help bridge some of this gap.”
Pakistan and the IMF reached a three-year, $7bn aid package deal in July last year, giving much-needed respite to the nation. The new programme aimed to enable Pakistan to “cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth”.
In May this year, the IMF board approved a fresh $1.4 billion loan to help Pakistan strengthen its economic resilience to climate vulnerabilities and natural disasters. However, the disbursement of funds is contingent upon successful completion of reviews under the EFF, an IMF official said.
The opening session of the IMF talks which kicked off on Monday was attended by key economic stakeholders, including the State Bank of Pakistan governor, finance secretary and chairman of the Federal Board of Revenue (FBR).
While power sector benchmarks for the end-June 2025 period were comfortably met, revenue collection fell short by about Rs1.2 trillion — almost 1pc of GDP — in the last fiscal year, and the first two months of the current fiscal year have shown similar shortfalls.
The mission will remain in Pakistan for almost two weeks and will also hold forward-looking discussions with the authorities to push for faster implementation of the end-December 2025 targets.
Upon the successful completion of the review, Pakistan will be eligible for the disbursement of about $1bn (760 million Special Drawing Rights) by the end of next month.
