KARACHI: Pakistan and the International Monetary Fund (IMF) on Tuesday resumed talks on the terms of a bailout package, the finance ministry said, as Islamabad seeks its 13th bailout since the late 1980s to deal with a current account deficit.
IMF mission chief Ernesto Ramirez Rigo arrived in Islamabad on Tuesday to continue the discussions as both sides moved closer to a deal that is expected to fetch Pakistan $6 billion.
“Introductory discussions with IMF mission chief for Pakistan, Ernesto Ramirez Rigo, began today,” finance ministry spokesman Dr. Khaqan Hussain Najeeb said. “Discussions focused on industries, commerce, fiscal framework and external sector.”
The IMF mission chief also met with Abdul Razak Dawood, the prime minister’s adviser on commerce, who briefed Rigo about Pakistan’s soon to be introduced “first national tariff policy” and other measures and reforms taken to boost production and exports, Najeeb said. 
Talks with the IMF began soon after Prime Minister Imran Khan’s government was appointed last August but a package has been held up by differences over the pace and scale of reforms that Pakistan would be required to undertake.
The IMF has pressed Pakistan to improve tax revenue collection, bolster foreign currency reserves and narrow a current account deficit expected to top 5 percent of gross domestic product this year.
Pakistani officials say they agree on the need for reforms but do not want to sign up to conditions that would derail the economy, with growth set to slow this year to around 4 percent from 5.2 percent last year.
On Monday, Pakistani finance minister Asad Umar had said Pakistan and the IMF had reduced their differences. 
“There is no change in the stance of Pakistan but the fund has changed their stance,” Umar told journalists in Islamabad.
The finance ministry denied that discussions on Tuesday had focused on the target exchange rate. 
“No target exchange rate was discussed, neither does IMF envisage a target,” Najeeb said. “Focus is on further strengthening the exchange rate regime, aligning it and keeping it consistent with the evolving macroeconomic fundamentals of the economy.”
Pakistan has also obtained short-term loans worth $3 billion from historically Saudi Arabia and $3 billion for the UAE. Staunch ally China has offered a $2.2 billion package.
On the back of talks between the IMF and Pakistan, the stock and currency markets showed positive response on Tuesday but investors remained cautious.
“The stock market was positive today for a number of factors” said Samiullah Tariq, Head of Research at Arif Habib Limited. “Talks with the IMF also played a positive role.”
Samiullah said uncertainty would prevail until the talks took final shape.
“The sentiment in the market has improved but volume in the market has dried up due to austerity measures taken by the government which have limited business growth because the private sector has gone on hold,” Muzzamil Aslam, senior economist, said. 
“The market has positively responded to the inflows from China and the talks with the IMF,” Malik Bostan, President of the Forex Association of Pakistan, told Arab News. The exchange rate, which was 141.80 against the US dollar on Friday, has come down to close at 140.90 in the open market, Bostan said. “The release from prison of former prime minister Nawaz Sharif on bail has also played an important role.”