IMF’s Pakistan mission chief meets FinMin Aurangzeb to discuss $7bn loan performance

Islamabad (Reuters): The International Monetary Fund’s (IMF) Pakistan mission chief Nathan Porter met with Finance Minister Mohammad Aurangzeb in Islamabad on Tuesday to discuss the $7 billion loan performance, a statement from the Finance Ministry said.

The meeting comes a day after the opening of an unplanned official visit of the IMF to the country, led by Porter. The unscheduled visit of the IMF mission chief comes four months ahead of the first review under the new $7 billion Extended Fund Facility (EFF) granted to Pakistan by the global lender in September.

The visit is “unusual” and comes months ahead of the first EFF review which is due in the first quarter of 2025, according to Reuters.

The ministry and the IMF have not officially released details of the visit.

On Monday, Pakistan authorities stuck to budgeted revenue targets and promised to overcome first-quarter shortfalls through enforcement and administrative measures.

The mission will stay here until Nov 15 “to discuss recent developments and programme performance to date”, according to informed sources. “This mission is not part of the first review under the extended fund facility (EFF), which will be no earlier than the first quarter of 2025,” they said.

Under the programme modalities, the IMF and Pakistan authorities are required to hold biannual review meetings. As such, the first formal review has to take place on the basis of end-December 2024 performance for Pakistan to qualify for disbursement of a second instalment of over $1bn by March 15, 2025. The $7bn programme is divided into six biannual reviews for equal tranches of $1bn each.

The sources said the Pakistani side updated the visiting mission about Rs190bn revenue shortfall in the first four months, almost half of which accrued in October alone. This had raised alarms in the lenders’ quarters that revenue shortfall was gradually increasing with the declining rate of inflation.

An unplanned mission was thus rolled out to take stock of the situation, not only at the revenue front but also on the privatisation programme that met with a setback at the botched sale of Pakistan International Airlines, raising a question mark over the prequalification of bidders and privatisation strategy on a whole.

The sources said the FBR team assured the mission that its enforcement and administrative measures were just taking off and its efforts were gaining momentum to show initial results by the end of the current month and narrow down early revenue losses.

The shortfall, they added, was within the 1pc quarterly rolling target. They said the FBR may wish to plead a “downward revision in revenue target instead of a mini-budget” as the talks progress but had not even given a hint in the first round.

Over the coming days, the two sides will be deliberating on key programme benchmarks, particularly relating to federal revenues, SOEs, external financing gap and provincial fiscal direction and revenue measures, to ensure that any slippages on performance criteria are corrected ahead of scheduled biannual revenue.

This is for the fact that not only Pakistan’s past programme performances but IMF’s own credibility remains at stake.