IMF, Pakistan make ‘significant progress’ towards staff-level agreement, lender says

Pakistan authorities and the International Monetary Fund (IMF) have made “significant progress” towards reaching a staff-level agreement (SLA) on a new programme, according to an end-of-mission statement posted on the lender’s website.

The IMF mission, which concluded its visit on May 23, was in Islamabad to discuss Pakistan’s pursuit of a longer, larger Extended Fund Facility (EFF).

“Building on the economic stabilisation achieved through the successful completion of the 2023 Stand-by Arrangement (SBA), the IMF and the Pakistani authorities made significant progress toward reaching a Staff Level Agreement (SLA) on a comprehensive economic policy and reform programme that can be supported under an Extended Fund Facility (EFF),” IMF Mission Chief to Pakistan Nathan Porter was quoted as saying in the statement.

Mission and authorities will continue policy discussions virtually over the coming days aiming to finalise discussions, including the financial support … from the IMF and Pakistan’s bilateral and multilateral partners

“The authorities’ reform programme aims to move Pakistan from economic stabilisation to strong, inclusive, and resilient growth.

“To achieve this, the authorities plan to continue to strengthen public finances to reduce vulnerabilities by improving domestic revenue mobilisation through fairer taxation while scaling up spending for human capital, social protection, and climate resilience; secure energy sector viability, including reforms to reduce the high cost of energy; continue progress towards low and stable inflation by appropriate monetary and exchange rate policies; improve public service provision through state-owned enterprise (SOE) restructuring and privatisation; and promote private sector development, by securing a level-playing field for investment and stronger governance.

“The mission and the authorities will continue policy discussions virtually over the coming days aiming to finalise discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan’s bilateral and multilateral partners.

“The IMF team is grateful to the Pakistani authorities, private sector, and development partners for fruitful discussions and their hospitality throughout this mission.”

Pakistan’s $3-billion SBA concluded last month, but authorities in Islamabad have been keen to pursue a 24th bailout with the IMF, hoping that a longer, larger EFF will put it on the path of permanence when it comes to economic stability and reform.

Many analysts believe that the IMF and Pakistan will be able to reach a staff-level agreement once the government presents the budget on June 7.