Pakistan Likely to Start Talks With IMF Next Week for Final Loan Tranche

Pakistan will likely commence negotiations with the International Monetary Fund (IMF) next week over the third and final loan tranche of $1.1 billion under the $3 billion Stand-By Arrangement (SBA), and to initiate discussions for potentially expanding its 3-year Extended Fund Facility from $6 billion to $8 billion by incorporating climate finance. The lender is awaiting a formal invitation from the new federal government and its review mission is slated to arrive in Islamabad after the formation of the federal cabinet, local media reported today. The next finance minister must meet the Federal Board of Revenue’s (FBR) tax collection target of Rs. 890 billion for March 2024 or risk forcing the IMF’s hand in the shape of additional taxation measures. The lender has outlined eight contingent measures for the FBR to implement in case of revenue shortfalls. On Monday, Prime Minister Shehbaz Sharif directed for immediate initiation of talks with the IMF regarding its Extended Fund Facility for a bigger and longer bailout for Pakistan. At the moment, the ongoing $3 billion SBA project is set to end on April 12, 2024; therefore, it remains to be seen whether the coalition government wishes to complete the ongoing SBA program by securing its final tranche of $1.1 billion or begin negotiations for a new three-year EFF contract. It bears mentioning that Pakistan received $705 million from IMF in January 2024.