IMF review mission plans Pakistan visit post-new government formation

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Islamabad [Pakistan], February 12: The International Monetary Fund (IMF) review mission is scheduled to visit Pakistan following the formation of new governments at the central and provincial levels, a process expected to take two to five weeks after the February 8 general elections.
The impending visit of the IMF delegation holds significant importance for the completion of the USD 3 billion stand-by arrangement (SBA), set to expire on April 12. Subsequently, to prevent a default on repayment of foreign debts, the mission will finalize the key aspects of the anticipated medium-term bailout package.
According to the IMF’s recent staff report, the rephasing of access for the second review to March 15, 2024, allows ample time for completing the program’s structural agenda.
However, amid lingering controversies surrounding the election results, a potential delay in the mission’s arrival for the completion of the second review and the release of the last tranche worth USD1.2 billion under SBA could raise concerns about economic stability.
According to Geo News, as of the week ending February 2, 2024, the country’s foreign exchange reserves stood at approximately USD 8.04 billion, witnessing a decline of USD 173 million due to external debt repayments.
As per the Ministry of Finance’s assessment, the IMF’s review mission is likely to visit Islamabad by the end of the ongoing month or early next month, contingent upon the formation of governments at the federal and provincial levels.

The official emphasized that the disbursement of the final tranche of USD1.2 billion is contingent upon the newly elected government assuming office, with the new agreement to be finalized accordingly.
Amidst growing concerns regarding election transparency, the USA, European Union, and other countries have raised doubts and called for an investigation into irregularities and allegations of election fraud.
While the tentative date for the IMF’s review mission was set for the first week of February, the IMF declined to visit on the eve of general elections.
The delayed review process in February/March may pose challenges for both parties to adhere to the completion of the last review and release of the third tranche under the stand-by arrangement SBA program by April 12, 2024.
Consequently, the possibility of striking a new agreement with the IMF might become imminent, as the next budget for 2024-25 hinges on IMF confidence in key budgetary targets.

Dr. Khaqan Najeeb, former adviser to the finance ministry, emphasized the timely completion of the second review, based on end-December 2023 performance and continuous criteria.
The IMF’s proposed schedule shows March 15, 2024, as the date for the availability of (Special Drawing Rights) SDRs of USD 828 million for Pakistan.
Dr. Najeeb stressed the importance of utilizing the review visit to discuss the contours of a new program supported by the IMF, including fiscal and monetary frameworks, social spending for cost-of-living relief, and structural reforms for energy sector viability, (state-owned enterprise) SOE divestment, and climate resilience.

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