KARACHI: An International Monetary Fund (IMF) staff mission is expected to arrive in Islamabad today, Wednesday, to begin discussions on key program reviews that will determine Pakistan’s continued access to funding under its $7 billion bailout and a parallel climate resilience facility.

The visit, confirmed last week by IMF communications director Julie Kozack, will cover the third review under the Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF), which supports climate-vulnerable countries.

“We do have a staff team that is expected to visit Pakistan starting February 25th for discussions on the third review under the EFF and the second review under the RSF,” Kozack said at a regular press briefing last week.

The talks come at a sensitive moment for Islamabad, which has spent the past year implementing tax increases, subsidy rationalization and tight monetary policy to stabilize an economy that teetered on the brink of default in 2023.

IMF officials have credited those measures with producing measurable gains. Kozack said Pakistan’s policy efforts under the EFF had helped stabilize the economy and rebuild confidence, pointing to a primary fiscal surplus of 1.3 percent of GDP in the last fiscal year, contained inflation and the country’s first current account surplus in 14 years.

The review is expected to probe fiscal discipline and energy sector reforms, two areas that have historically complicated negotiations between Islamabad and the Fund.

Analysts told Arab News last week that while approval of the next tranche is likely, discussions might not be straightforward.

“This is expected to be a smooth sailing. However, questions might arise,” Shankar Talreja, head of research at Karachi-based Topline Securities Limited, said earlier.

He pointed to a revenue shortfall of Rs336 billion ($1.2 billion) against IMF targets and raised the possibility that the Fund may seek clarification over the government’s recent reduction in electricity tariffs for export-oriented industries, a move designed to support manufacturing but with fiscal implications.

A positive outcome of the review is vital for continued disbursements under the EFF and RSF programs. It will also be important to sustain investor confidence as the country seeks to consolidate its fragile economic recovery.

A successful staff-level review leads to a provisional agreement between the two sides, which then requires approval by the Fund’s Executive Board before the disbursement of the next tranche.