The IMF delegation engages in significant discussions with Finance Minister Aurangzeb regarding the $3 billion Stand-By Arrangement (SBA)

During a crucial meeting held on Thursday, Pakistan’s Finance Minister, Muhammad Aurangzeb, engaged in discussions with the visiting International Monetary Fund (IMF) mission concerning structural reforms and the sustainability of the energy sector.

The mission’s visit is part of the second review process of the $3 billion Stand-By Arrangement (SBA) established between Pakistan and the international lender.

The discussions covered various aspects of Pakistan’s macroeconomic landscape, including the government’s fiscal consolidation efforts, structural reforms, the sustainability of the energy sector, and the governance of state-owned enterprises (SOEs). The finance minister reiterated the government’s commitment to collaborating with the IMF to advance the reform agenda aimed at promoting economic growth and enhancing stability across Pakistan.

During the meeting, Nathan Porter, head of the IMF mission, congratulated Muhammad Aurangzeb on his appointment as the finance minister.

There are high expectations that the IMF mission’s visit could result in a staff-level agreement regarding the second review of the SBA.

Since its inception in July 2023, Pakistan has received $1.9 billion out of the allocated $3 billion under the nine-month program.

Aurangzeb outlined the government’s intention to explore the possibility of securing a more extensive and prolonged Extended Fund Facility (EFF) within the IMF framework to achieve macroeconomic stability.

Officials from Pakistan, including Finance Minister Muhammad Aurangzeb and Energy Minister Musadik Malik, briefed the IMF team on the concerted efforts undertaken to implement the prescribed reforms, including adjustments to energy tariffs.

An official from the Finance Division, speaking on condition of anonymity, disclosed the IMF’s acknowledgment of Pakistan’s progress in meeting quarterly program targets under the SBA.

Discussions are underway to determine the trajectory of the subsequent program, with deliberations leaning towards a more extensive endeavor valued at approximately $8 billion.

Minister Malik elaborated on the government’s energy reform agenda, highlighting recent adjustments in electricity and gas prices in line with the stipulated schedule.

The recent increases in levies on petrol and diesel, along with the rise in gas tariffs for domestic consumers, underscore Pakistan’s commitment to meeting key conditions outlined in the IMF’s final review.

Economic analysts anticipate a smooth final review process, citing Pakistan’s commendable adherence to the IMF’s performance targets as a sign of potential success.

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