The International Monetary Fund (IMF) review mission is slated to visit Pakistan after the formation of new governments at both federal and provincial levels.
The visit is pivotal for concluding the $3 billion Standby Arrangement (SBA) set to expire on April 12. Subsequently, the mission will delineate key aspects of an expected medium-term bailout package to prevent a default on foreign debt repayments.
The IMF has proposed extending the second review deadline to March 15, 2024, allowing ample time to fulfil the program’s structural agenda. Nonetheless, the delay in the mission, possibly due to ongoing electoral controversies, stirs concerns about finalising the second review and disbursement of the last $1.2 billion tranche under the SBA amidst fears of economic default.
Pakistan’s foreign exchange reserves were reported at $8.04 billion as of the week ending February 2, 2024, having diminished by $173 million due to external debt obligations.
A Finance Division official affirmed that the IMF’s visit for the second review discussions hinges on the completion of government formation at the national level.
The Ministry of Finance anticipates the IMF review mission’s arrival in Islamabad by late this month or early next, contingent upon the government’s formation at federal and provincial tiers.
The release of the final $1.2 billion tranche is conditional on the assumption of office by the new government, with whom the forthcoming agreement will also be negotiated.
Amid concerns over election transparency and calls for investigation into alleged irregularities from international observers, including the USA and EU, the IMF had initially planned its review mission for the first week of February but deferred the visit due to the elections.
A delay in the IMF program due to the formation of the new government risks propelling Pakistan towards a severe balance-of-payments crisis and the precipice of default.