ISLAMABAD: The International Monetary Fund announced on Thursday that it has not yet reached a staff-level agreement (SLA) with Pakistan on the third review of the $7 billion Extended Fund Facility (EFF) and the second review of the Resilience and Sustainability Facility (RSF), although negotiations have made notable progress and will continue in the coming days.
In its end-of-mission statement, the IMF said its delegation, led by Iva Petrova, held discussions with Pakistani officials in Karachi and Islamabad, as well as through virtual meetings, between February 25 and March 11.
Petrova noted that while the talks achieved substantial progress, more discussions are required to better evaluate the effects of recent global developments on Pakistan’s economic outlook and the ongoing IMF-supported programme.
The IMF said Pakistan’s implementation of the EFF programme generally remained consistent with its commitments through the end of February.
Policy discussions focused on maintaining fiscal consolidation to strengthen public finances, ensuring a tight monetary policy to keep inflation within the target range set by the State Bank of Pakistan, and continuing reforms aimed at improving the performance and sustainability of the energy sector.
The talks also addressed the need to expand structural reforms, as the government aims to accelerate economic growth while enhancing social protection programmes and restoring spending in health and education sectors.
According to the IMF, Pakistan has also made encouraging progress on reforms designed to strengthen climate resilience, including steps taken under the RSF framework.
The discussions additionally examined the potential economic impact of the ongoing tensions in the Middle East, particularly regarding Pakistan’s balance of payments, external financing needs, and rising global energy prices, which have added pressure to global financial conditions.
The IMF team and Pakistani authorities will continue negotiations in the coming days with the aim of finalising the agreement.
The review mission had been in Pakistan since February 25. However, discussions shifted to virtual meetings on March 3 following escalating tensions in the Middle East.
If the review is successfully completed, Pakistan is expected to receive approximately $1 billion under the EFF programme and about $200 million through the RSF facility by the end of April.
