IMF talks conclude, Pakistan awaits $2.2 billion disbursement

ISLAMABAD: Pakistan has made significant progress in its economic recovery efforts, concluding pivotal discussions with the International Monetary Fund (IMF) on Friday.

The talks, part of the first review under the Extended Fund Facility (EFF), pave the way for a staff-level agreement that will release an anticipated $2.2 billion. In addition, the talks addressed climate finance augmentation, reflecting a broader commitment to sustainability.

Though no official statements were immediately issued, it is expected that the IMF will release a formal announcement by Friday night or Saturday. The Ministry of Finance is holding back on any public comments until the IMF provides its official communication.

Pakistan expects to receive $1 billion as part of the $7 billion EFF, with another $1 billion to $1.2 billion expected through the augmentation of the Rapid Sustainability Facility (RSF). This funding will bring the total financial assistance to approximately $2 billion to $2.2 billion, with disbursement anticipated to follow six weeks after the IMF’s Executive Board gives its approval.

The two-week-long negotiations yielded a broader framework for macroeconomic and fiscal adjustments for the ongoing fiscal year. Key indicators, including GDP growth, inflation, and the current account deficit (CAD), were revisited and recalibrated.

Notably, Pakistan’s projected economic size for the current fiscal year was revised downward from Rs123 trillion to Rs116.5 trillion. Real GDP growth estimates were also scaled back, while average inflation, measured by the Consumer Price Index (CPI), was adjusted from an earlier forecast of 12.5 per cent to a more moderate 7 per cent.

The country’s current account deficit, which had temporarily shifted into a deficit of $0.4 billion due to a spike in imports ahead of Ramazan and Eidul Fitr, is projected to maintain a small overall surplus of $600 million by the end of the fiscal year.

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