ISLAMABAD: An International Monetary Fund (IMF) delegation is in Islamabad this week and will hold discussions with top Pakistani officials on the “key benchmarks” of a $7 billion loan program approved in September, a finance ministry official said on Tuesday.

The IMF delegation led by Pakistan mission chief Nathan Porter arrived in Islamabad on Monday on an unplanned visit. The team is expected to hold meetings until Friday with top officials from ministries such as finance and energy and the Federal Board of Revenue, the main tax collection agency, to collect data on “loan program performance to date,” a finance ministry official told Arab News, seeking anonymity. 

The IMF has said Porter’s visit is not part of the first review of the loan program, which is not scheduled to take place before the first quarter of 2025. 

“Some key benchmarks of the loan program will come under discussion during the meetings, as Islamabad faces some revenue shortfall and a recent botched attempt to privatize the Pakistan International Airlines,” the finance ministry official said. 

“Matters like external financing gap and reforms in the energy sector are also expected to be discussed with the IMF delegation.”

The IMF reached a staff-level agreement with Pakistan in July for a 37-month $7 billion bailout package, which the Fund’s Executive Board approved in September. This was the 25th loan program that Pakistan has obtained since 1958.

In a statement released on Tuesday, the ministry of finance said a delegation led by Porter had an “initial meeting” with finance minister Muhammad Aurangzeb.

Minister of State for Finance Ali Pervez Malik, Governor State Bank Jameel Ahmed, Federal Board of Revenue Chairman Rashid Mahmood Langrial and senior finance ministry officials were also present in the meeting, the ministry said.

Islamabad secured the bailout loan, critical to keeping its $350 billion fragile economy afloat, after taking painful measures such as hiking fuel and food prices and implementing reforms to broaden the country’s tax base and privatize state-owned entities.

“INTERIM CHECKS”

Pakistan’s macroeconomic conditions and investor sentiment have improved in recent months, which analysts say has led to a bullish trend in the country’s stock market.

Syed Atif Zafar, the chief economist at Topline Securities, said the IMF delegation’s meetings with Pakistani officials were part of “interim checks” to ensure a successful review of the loan facility next year. 

“The government failed to achieve the tax revenue target in the first quarter that has perhaps necessitated this IMF visit, but still the authorities have multiple options and time to overcome this gap,” he told Arab News. 

“The good thing at this point is that all structural and quantitative benchmarks of the loan program are on track.”

Tahir Abbas, a senior economist and head of research at Arif Habib Limited, said Pakistan last month requested the IMF for a $1 billion climate financing facility to mitigate climate risk, which would be discussed during the ongoing IMF visit.

“Pakistan’s revenue shortfall of around Rs200 billion ($720 million) in the first quarter has mainly necessitated this IMF visit,” he told Arab News. 

“The finance ministry will now inform the IMF delegation about the possible revenue measures to overcome the shortfall and cut the expenditures.”