Deadlock continues between IMF and Pakistan over ninth review

The International Monetary Fund (IMF) is pressing Islamabad for the policies and reforms necessary to meet the goals of the bailout program and complete the next ninth review, but negotiations between the two parties have reached a standstill.

 “… a key purpose of program reviews in Pakistan, as in all program countries, is to evaluate both program performance to date, as well as, forward-looking, whether the program is on track or policy measures are needed to meet program targets, advance reform objectives, and maintain macroeconomic stability going forward,” IMF’s Resident Chief in Pakistan Esther Perez Ruiz was quoted as saying in The News.

An IMF review for the release of the next tranche under bailout funding has been pending since September. However, Finance Minister Ishaq Dar claimed last week that Pakistan met all targets for the review.

“Discussions with the Pakistani authorities in these areas are ongoing, especially as not all end-September quantitative targets have been met.” the IMF resident chief said.

“Significant new developments, including the extraordinary floods and a number of new measures and developments, have taken place since the last program review, which affect this year’s economic outlook.” Ruiz added.

According to the publication the global lender has communicated to the finance ministry that it requires completion of all end-quarter performance criteria and targets.

“For the remaining program period, which runs through June 2023, both sides would also require broader agreement on forward-looking data on the basis of which the performance targets and indicative targets for the remaining program time will be set.” they continued.

Following the devastating floods, the IMF and Pakistan changed all macroeconomic and fiscal frameworks in order for both parties to come to an agreement.

The broader agreement on the revised macroeconomic framework could pave the way for evolving consensus on a staff-level agreement for the completion of the 9th review under the $7 billion Extended Fund Facility (EFF).