IMF says further discussions with Pakistan on fiscal spending plans, structural reforms needed

The International Monetary Fund (IMF) on Thursday said that further discussions with Pakistan are needed on Pakistan's fiscal spending plans, structural reforms, particularly in the tax and energy sectors, and social spending.

According to IMF spokesman Gerry Rice, the Fund is holding open, constructive discussions with Pakistan as part of a sixth review of the country's 39-month, $6 billion financing programme that began in 2019.

Rice declined to say if disbursements under that programme had been halted.

IMF staff were unable to complete the talks during a recent mission, but the global lender remained “fully engaged” and aimed to resume the discussions in the period ahead, Rice told a regular IMF briefing.

“We stand ready to continue to support Pakistan,” he said. “As the recovery gains strength, it will be important to accelerate the implementation of policies and reforms needed to address some of the long-standing challenges facing the Pakistani economy.”

Pakistani authorities and IMF, for the time being, have agreed to continue talks to narrow down differences, but the IMF-sponsored programme has been put on halt mode as the international money lender has conveyed that the sixth review under the Extended Fund Facility (EFF) will be accomplished in September this year instead of July 2021.

Following allegations by former finance minister Miftah Ismail that the IMF programme had been suspended, the Ministry for Finance had issued a statement to clarify that this was not the case.

In a statement, the ministry said that the IMF team will visit Pakistan in August and review the economic performance of the country.

The ministry also said that Pakistan completed all the targets given by the Fund in March and claimed Pakistan had an excellent performance during the outgoing fiscal year.

Last week, Minister for Finance Shaukat Tarin ruled out the possibility of Pakistan's exit from the IMF programme, during his discussion with the Senate Standing Committee on Finance in Parliament House

Pakistan this month set a growth target of 4.8% for the 2021-22 financial year and a fiscal deficit target of 6.3%.

The country surpassed growth projections in the 2020-21 financial year despite a third wave of COVID-19 infections, reaching GDP growth of 3.96%, after a 0.47% contraction in 2019-20.