The International Monetary Fund (IMF) has decided to send a mission to Pakistan next week—four months ahead of schedule—to review Pakistan’s progress on the $7 billion bailout package.
This expedited review reflects the IMF’s heightened focus on Pakistan’s economic stability and performance in implementing approximately 40 program conditions, the sources said. The IMF Pakistan Mission Chief Nathan Porter will lead the delegation, evaluating targets that Pakistani authorities argue may have become outdated since the program’s approval just last month.
The early IMF mission is expected to examine Pakistan’s economic performance during the July-September quarter, covering areas like revenue collection, budget surplus goals, and other key fiscal metrics. Initially, biannual reviews were set for the new program, with the first assessment planned for March 2025. However, the IMF’s arrival now allows for a closer look at first-quarter outcomes and updates on the second quarter from October through December.
Government officials and economic advisors are split on whether to negotiate adjustments to program targets. Some officials advocate recalibrating revenue targets, while others believe the IMF may resist renegotiations. Meeting the original targets could necessitate a mini-budget to offset revenue shortfalls, potentially using savings from recent debt servicing cuts following a rate reduction.
The IMF Mission will comprise experts in areas like monetary policy, fiscal affairs, financial markets, climate finance, and sovereign debt. Early reports reveal mixed performance by Pakistan, with the State Bank of Pakistan meeting monetary targets and the finance ministry achieving budget surplus goals. However, the Federal Board of Revenue (FBR) missed its collection target, and provincial governments reported overspending, particularly in Punjab, leading to a significant shortfall in provincial cash surplus targets.
Finance ministry reports indicate that Pakistan met key IMF objectives for net provincial revenue and primary budget surplus, largely due to the central bank’s profits booked in the first quarter. Still, FBR reported an overall tax shortfall of Rs190 billion, collecting Rs3.440 trillion against the Rs3.632 trillion target.
Additionally, challenges persist in coordinating fiscal policy between federal and provincial levels, as provincial governments failed to meet the end-October deadline to increase agriculture tax rates to 45%. Government officials link these shortfalls to discrepancies between target projections and actual results, especially given the limited intergovernmental cooperation in implementing IMF requirements.
