KARACHI: International Monetary Fund (IMF) representatives arrived in Islamabad on Monday for their second quarterly review of Pakistan’s $6 billion bailout program, confirmed the finance ministry in a statement.
Adviser to the Prime Minister on Finance and Revenue, Dr. Abdul Hafeez Shaikh, met with the IMF Staff Mission at the Finance Division.
The IMF team is scheduled to stay in Pakistan for 11 days to hold technical and policy talks with Pakistani authorities and evaluate the implementation of agreed economic targets.
The review would clear the way for the disbursement of $450 million in bailout funds in March 2020. Pakistan has already received about $991 million in July 2019 and another $452 million in December.
The review is taking place at a time when the government is suffering from revenue shortfalls and a leadership crisis at the Federal Board of Revenue (FBR) – the country’s tax agency. The shortfall during the first seven months of the current fiscal year is more than Rs218 billion against the revised revenue target of Rs2.62 trillion.
“This time they seem worried about the leadership discontinuation at FBR,” said Vaqar Ahmed, director at the Sustainable Development Policy Institute (SDPI).
Pakistan also faces the challenges of structural reforms in the energy sector and on the privatization front, in which IMF “wanted to see speedy proceedings,” Ahmed told Arab News. “The process has started but still there is a far way to go complete it.”
Inflation continues to soar in Pakistan and has reached a higher-than-expected 14.6 percent rate in January 2020, which may also come under discussion as the IMF had forecast it at 13 percent.
“I feel that due to high inflation the government may request IMF to relax some targets such as electricity and gas tariffs that are to be increased in the coming days,” Ahmed said.
However, some economists expect that Pakistan will not seek waivers other than those regarding tax collection targets, which have not been achieved due to the economic slowdown and import compression.
“We have outperformed at some areas such as net international reserves, current account, and foreign exchange reserves. The revenue collection targets were missed because the economy is slowing down and imports are declining,” senior economist Muzamil Aslam told Arab News, expressing confidence that the IMF review will not create any trouble for Pakistan.
At the end of the first economic performance review in December, the IMF acknowledged that Pakistan’s reform program was progressing as planned.