KARACHI: A visiting International Monetary Fund (IMF) mission kicked off talks with Pakistani officials on Monday as it holds the second review of its $7 billion External Fund Facility (EFF) and first review of the $1.4 billion Resilience and Sustainability Facility (RSF) loan programs for the country, the lender confirmed. 

The IMF mission arrived in Pakistan on Sept. 25 to conduct the reviews. The global lender approved a $7 billion bailout package for Pakistan under its EFF program in September 2024 while in May, it approved a separate $1.4 billion loan for Pakistan as a climate resilience fund. The RSF will support Pakistan’s efforts in building economic resilience to climate vulnerabilities and natural disasters. 

“Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, chairing the kick-off meeting with the visiting IMF Review Mission at the Finance Division today,” the IMF said in a statement, sharing pictures of the meeting between the two sides. 

The discussion takes place as Pakistan seeks concessions in its program targets following devastating floods that killed over 130 in its eastern Punjab province since late August, impacted over 4.5 million people and destroyed large swathes of crops. The devastation has spiked food prices in many parts of the country, with experts warning of food shortages due to supply chain disruptions. 

Prime Minister Shehbaz Sharif met the fund’s Managing Director Kristalina Georgieva in New York last week on the sidelines of the ongoing United Nations’ General Assembly session. During the meeting, Sharif spoke about Pakistan’s progress in fulfilling the IMF program targets but also demanded that the impact of recent floods on Pakistan’s economy “must be factored into the IMF’s review,“

Islamabad has so far received more than $2 billion under the EFF and is expecting a third tranche of $1 billion after the second review concludes successfully.

IMF’s bailout packages have proven instrumental in keeping Pakistan’s fragile $350 billion economy afloat, as the country grapples with tough economic conditions that have triggered a balance of payments crisis and weakened its national currency. 

Pakistan has undertaken painful measures in the past, such as removing subsidies that have resulted in higher food and fuel prices, spiking inflation in the country. Pakistani financial experts told Arab News last week they expected the global lender to grant Islamabad concessions as far as its program targets were concerned, in light of the damages inflicted by the recent floods. 

 “We are expecting Pakistan to get a little breather due to the floods,” economist Sana Tawfik said last week, adding that Islamabad would comfortably meet the international lender’s targets. 

Shankar Talreja, head of research at brokerage firm Topline Securities Ltd., said the current review will focus on continuing the IMF’s reforms under revised parameters due to the floods. He said the government is expected to keep pushing for privatization of state-owned enterprises and clearing its old backlog of circular debt.
 
“The concessions are likely in form of some downward revisions in FBR (Federal Board of Revenue) tax revenue, upward revision in fiscal balance over relief spending and there might a downward adjustment in GDP growth target as well,” Talreja said.