IMF’s Unplanned Visit Ahead of First Review
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, according to a statement from the Finance Ministry.
This unplanned official 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 described as “unusual” and comes much earlier than the scheduled first EFF review, which is due in the first quarter of 2025, according to Reuters.
Discussions on IMF Revenue Shortfall and Program Performance
During the meeting, the Pakistani authorities updated the visiting IMF mission about a Rs190 billion revenue shortfall in the first four months, with almost half of it accruing in October alone. This has raised concerns within the lender’s quarters that the revenue shortfall is gradually increasing as the rate of inflation declines.
The sources said the FBR (Federal Board of Revenue) team assured the mission that its enforcement and administrative measures were just taking off and efforts were gaining momentum to show initial results by the end of the current month and narrow down early revenue losses. The FBR may wish to plead for a “downward revision in the revenue target instead of a mini-budget” as the talks progress.
Ensuring IMF Program Benchmarks are Met
Over the coming days, the two sides will be deliberating on key program benchmarks, particularly relating to federal revenues, state-owned enterprises (SOEs), external financing gaps, and provincial fiscal direction and revenue measures. The aim is to ensure that any slippages on performance criteria are corrected ahead of the scheduled biannual review.
This is crucial as not only Pakistan’s past program performances but the IMF’s own credibility remains at stake. The $7 billion program is divided into six biannual reviews for equal tranches of $1 billion each, with the first formal review due based on the end-December 2024 performance.
IMF Privatization Program and Other Issues
The sources said the visiting mission will also take stock of the privatization program, which has faced a setback with the botched sale of Pakistan International Airlines, raising questions about the prequalification of bidders and the overall privatization strategy.
The IMF mission is scheduled to stay in Pakistan until November 15 “to discuss recent developments and program performance to date,” according to the informed sources. However, they clarified that “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.”