IMF sends team to Pakistan for early review; govt cynical of visit

Islamabad: The International Monetary Fund (IMF) has decided to do an early review of Pakistan’s $7 billion bailout package, scheduling a dispatch of its mission to Islamabad in the coming week.

This is a decision that many believe is a result of Islamabad’s uneven performance in compliance with its implementation agreement with the global lender.

As per official sources, a dispatch mission of the IMF to Pakistan will be landing in Islamabad next week, at least four months ahead of its planned schedule to evaluate Islamabad’s performance with the IMF on its $7 billion bailout package under the Extended Funding Facility (EFF).

IMF Pakistan Mission Chief Nathan Porter will lead the delegation, which will be tasked to review Islamabad’s performance and its compliance with around 40 conditions mutually agreed upon at the time of the loan approval.

Economist Shahbaz Rana said that the early arrival of the IMF mission to Pakistan underscores the importance of the programme for IMF board members.

“While the early arrival of the IMF mission provides Pakistan with an opportunity to reassess targets, some of which, the government of Pakistan believes may have already become irrelevant one month after the loan’s approval,” he said.

Pakistan government sources maintain that the IMF visit is to review the performance during July-September quarter.

Pertinently, IMF has conducted performance reviews of Pakistan on a quarterly basis. However, as per the new bailout programme, both parties agreed to have biannual assessments.

On the other hand, the early review of Pakistan’s performance by the IMF also rings alarm bells due to the mixed performance and early setbacks. Pakistan Prime Minister Shehbaz Sharif-led government is also cynical about the early visit of the IMF team.

Voices within the government quarters maintain that while the opportunity gives way for resetting certain targets through negotiations during the early review; others suspect a tough session and questionnaire by IMF, arguing that the IMF’s stance during the loan approval left less or no room for renegotiations.

Experts believe that if the Pakistan government retains the original targets as committed to the IMF, it would be compelled to table a mini-budget and handle the shortcomings of the first quarter and address the gaps forecasted for the second quarter.

As per details, Pakistan has witnessed a mixed performance in the first quarter with the State Bank of Pakistan (SBP) meeting its targets and finance ministry surpassing its quarterly target. However, FBR (Federal Board of Revenue) missed its revenue collection target and the provincial governments at large failed to achieve their collective cash surplus goals.

The early visit of IMF Pakistan mission is expected to bring more challenges for Islamabad and PM Shehbaz Sharif government as the terms and conditions agreed upon at the time of the loan approval, coupled with the mixed performance of Pakistan, may put Islamabad in a tough situation in front of the IMF.