ISLAMABAD: An IMF mission has arrived in Islamabad to talk about the ninth review of the $7 billion Extended Fund Facility, which is currently frozen (EFF).

The $7 billion Extended Fund Facility has been in limbo for months. The IMF review mission is in Pakistan to revive it through technical and policy level discussions.

The IMF review mission, led by Nathen Porter, recognised the budget shortfall and slippages during today's opening session and reiterated its stern stance on adhering to the lender's requirements.
Ishaq Dar, the finance minister of cash-strapped Pakistan, is leading the drive to conclude the ongoing ninth review.
The Fund has refused to budge on the terms it established for the restoration of the lending facility, leading analysts to label the technical level negotiations as "toughest."



Pakistan is experiencing a severe economic crisis, with the rupee falling, inflation skyrocketing, and a shortage of electricity. Fearing backlash before general elections, Prime Minister Shehbaz Sharif's administration resisted the IMF's demands for tax increases and subsidy reductions. However, Islamabad recently decided to take the bitter medicine as the possibility of national insolvency loomed and there were no friendly nations willing to grant bailouts.
In an effort to regulate the burgeoning illegal market for US dollars, the government relaxed restrictions on the rupee, which led to the currency's decline.
On the first day of the technical discussions, the two parties discussed Pakistan's economic position and the ninth review of the bailout programme, which has not been completed since September.

According to information made available to Geo News, the mission review did not raise any concerns about Pakistan's desire to offer subsidies to the low-income population of the nation, which is currently suffering from rising inflation and the effects of the devastating floods that affected 33 million people and left the nation in ruins.
The mission of the Fund supported Islamabad's request to continue humanitarian operations under the BISP.

Dar also gave the delegation a briefing on the government's fiscal and economic reforms and the steps it is taking in various sectors, such as the energy industry, to close the fiscal gap and maintain exchange rates.

According to sources cited by The Hit blogging, the Fund demanded that Pakistan fulfil commitments set in its federal budget for the fiscal year 2022–2023 by the coalition government, including:

. It is important to keep the budget deficit around 4.9%.
. The primary deficit is anticipated to be 0.2% of the GDP.
. Subsidy exemption for the export sector worth Rs. 1,100 billion needs to be ended.
. The FBR should reach its Rs7,470 billion tax collection goal.
. There should be a significant reduction in circular debt.
. The Rs855 billion collection goal for the petroleum levy need to be accomplished.
. To cut their losses, state-owned companies should perform better.
. Implementing a privatisation scheme is recommended.

According to the sources, Pakistan assured the Fund that it would fulfil all requirements but asked the Washington-based lender for extra time to put them into effect.


IMF wants the government to close a fiscal imbalance of Rs600 billion.


The Washington-based lender is recommending the strictest guidelines for the economy on all fronts at a time when foreign exchange reserves are steadily declining and have reached their lowest point of $3.6 billion.

However, prior to the talks, the government had already put in place two important criteria, namely enabling the rupee's exchange rate to be adjusted and raising gasoline prices to previously unheard-of heights.

The IMF is requesting that the government close the gaping fiscal hole of Rs. 600 billion by increasing taxes or reducing spending in order to keep the budget deficit and primary deficit within the targeted bounds.

As Islamabad appeared to agree to raise the electricity tariff of Rs7.50 per unit in a gradual manner, the IMF further wanted an increase in electricity tariff within the range of Rs12.50 per unit.

During the future negotiations with the IMF, the government may agree to eliminate the unintended power sector subsidies of the electricity and gas industry to influential groups. For customers, the gas tariff will also increase by around 74%.

"We will have to take bitter medicine because the gap has grown so large that the economy can no longer function using the status quo strategy. The burden will fall on the nation's middle class.

"We have developed a strategy to safeguard the weak and disadvantaged sections of society."