A team of experts from the International Monetary Fund (IMF) is set to visit Pakistan in mid-March for the first review of the country’s $7 billion loan programme, an IMF official confirmed on Friday.
If the review is successful, the IMF is expected to release a $1 billion tranche to help Pakistan, which is struggling with its finances, boost its foreign exchange reserves and meet the IMF's target of three months' worth of import coverage.
IMF bailouts are crucial for Pakistan, which narrowly avoided a sovereign default in June 2023 after securing a last-minute $3 billion loan from the IMF. The country is now navigating a challenging road to economic recovery.
"An IMF staff team is scheduled to visit Pakistan in early to mid-March to discuss the first review under the Extended Fund Facility-supported program," said Mahir Binici, the IMF’s resident representative in Pakistan.
The review is expected to focus on Pakistan’s progress in meeting taxation targets and implementing key structural reforms. The country has made significant strides in areas such as taxation, energy, and the management of loss-making state-owned enterprises (SOEs). Additionally, provincial governments in Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan have recently passed laws to tax farm incomes, in line with the IMF’s requirements.
Pakistan's finance advisor, Khurram Schehzad, recently told Arab News that the country is "fully prepared" for the review process, adding that the IMF is on board with the targets and benchmarks achieved, with only a few remaining to be met.
In addition to the $7 billion bailout, Pakistan is also seeking an additional $1.5 billion loan from the IMF to address climate-related challenges under the Resilience and Sustainability Facility (RSF).
"A technical team will be in Pakistan starting in late February to discuss the technical aspects of a potential RSF arrangement," Binici said.
Pakistan is among the countries most vulnerable to climate change, according to the Global Climate Risk Index. The 2022 floods, which scientists believe were worsened by global warming, affected over 33 million people and resulted in more than 1,700 deaths. The country's ongoing economic struggles and heavy debt burden hindered its ability to respond effectively to the disaster.