IMF team to visit Pak ahead of schedule to review $7 bn bailout package

The International Monetary Fund will dispatch a review mission to Pakistan earlier than scheduled to assess its progress under the USD 7 billion bailout package agreed upon last month as the cash-strapped nation strives to meet its budget targets and address economic challenges.

The IMF team is expected to arrive next week, four months ahead of its planned visit, apparently due to concerns over the implementation of the agreed-upon reforms between the two sides and assess Pakistan's eligibility for the next tranche of the bailout package.

According to a report published in The Express Tribune newspaper on Wednesday, the IMF mission's early arrival underscores the importance of the programme for the IMF management and board members, while providing an opportunity to reassess targets that, according to Pakistani authorities, may have already become irrelevant one month after the loan's approval.

 

Quoting diplomatic and government sources, the paper reported that IMF Pakistan Mission Chief Nathan Porter will lead the delegation, tasked with reviewing progress on the implementation of roughly 40 conditions agreed upon in exchange for the bailout.

While past IMF reviews were conducted quarterly, for the new programmes the parties agreed to biannual assessments. The IMF's staff report, released after the USD 7 billion loan approval, initially set the date for March 15, 2025, for the "first review and end-December 2024 for the performance and continuous criteria".

However, this mission will arrive just a month-and-a-half after the loan approval and four months ahead of the planned review, examining the results of the July-September targets and progress of the second quarter through October-December 2024.

If Pakistan sticks to the original targets, sources indicate that the government may be compelled to introduce a mini-budget to address first-quarter shortfalls and anticipated second-quarter gaps. Another option could be to offset tax targets using savings from lower debt servicing costs due to recent interest rate cuts.

The IMF mission typically includes specialists in monetary and exchange rate policy, financial markets, digitalisation, sovereign debt, climate financing, and fiscal affairs.

Pakistan's first-quarter results for the fiscal year were mixed. The State Bank of Pakistan (SBP) met its monetary targets, and the finance ministry exceeded its quarterly budget surplus target. However, the Federal Board of Revenue (FBR) missed its revenue collection target, while provincial governments failed to achieve their collective cash surplus goal due to overspending by Punjab.

The finance ministry's report indicated a shortfall of PKR 182 billion, or 53%, in the provincial cash surplus target of PKR 342 billion. The government could not support the FBR's efforts to collect PKR 10 billion from traders in the first quarter, missing the target by nearly 99.99%. Official figures show an overall tax collection shortfall of PKR 190 billion over four months, with the FBR collecting PKR 3.440 trillion against a target of PKR 3.632 trillion, despite record-high taxes imposed this year.

According to a Ministry of Finance report, Pakistan met IMF targets for the primary budget surplus and net revenue collection by the provinces. The federal government achieved a primary surplus of PKR 198 billion, with total surpluses reaching Rs 3 trillion, or 2.4% of the Gross Domestic Product (GDP).

This higher surplus was largely due to booking the annual profit of the central bank in the first quarter, reported the paper.