IMF mission to arrive in Pakistan in May for new loan

ISLAMABAD: A mission of the International Monetary Fund (IMF) will arrive in Pakistan this month to discuss a new ‘long-term and larger’ loan programme, sought to help government repay billions in debt due this year, ARY News reported on Wednesday, citing sources.

Sources told ARY News that Pakistan and the international lender have scheduled talks on a new loan programme. The talks will take place in two phases, with technical-level discussions followed by policy-level negotiations.

Pakistan faces significant economic challenges ahead of the new talks, including a failed tax amnesty scheme proposed by the IMF.

The federal government had promised to bring 3.1 million traders into the tax net under the scheme, but it has been unsuccessful. The Federal Board of Revenue (FBR) is facing an unusual situation after the recent changes in senior officials.

The new and relatively inexperienced FBR team will negotiate with the IMF, which will be a challenge. The IMF will also be concerned about the recent decline in FBR’s tax collections.

The failure to achieve the primary budget surplus target in the first nine months will also be on the agenda for the talks, sources added.

The development comes a day after Pakistan received the much-awaited $1.1 billion final tranche from IMF as part of the $3 billion standby arrangement.

The SBP said it received Special Drawing Rights (SDR) 828 million — equivalent to $1.1 billion in value — “following the successful completion of the second review by the Executive Board of IMF under Stand By Arrangement (SBA)”.

Pakistan is seeking a new long-term and larger IMF loan, with Finance Minister Muhammad Aurangzeb saying Islamabad could secure a staff-level agreement on the new program by early July.

Islamabad says it is seeking a loan over at least three years to help macroeconomic stability and execute a long-due and painful structural reforms, though Aurangzeb has declined to detail what seize of programme the country seeks. If secured, it would be the 24th IMF bailout for Pakistan.