Pakistan and the IMF begin negotiating the release of the second tranche of the $3 billion loan, valued at $710 million

 Pakistan and the IMF begin negotiating the release of the second tranche of the $3 billion loan, valued at $710 million

The International Monetary Fund's (IMF) mission chief for Pakistan, Nathan Porter, along with caretaker finance minister Dr. Shamshad Akhtar led their respective sides to the first round of two weeks of negotiations regarding the next tranche based on Pakistan's economic growth during the first quarter that began in July.

Low on funds The long anticipated loan review negotiations between Pakistan and the IMF for the delivery of the second tranche of a USD 3 billion rescue package, worth USD 710 million, have begun on a generally favorable tone.

The International Monetary Fund's (IMF) mission chief for Pakistan, Nathan Porter, alongside caretaker finance minister Dr. Shamshad Akhtar led their respective sides to the first round of two weeks of negotiations concerning the next tranche based on Pakistan's performance during the first quarter that began in July.

The Ministry of Finance stated in a statement after the meeting that Porter "appreciated the government's commitment" to fulfilling the first-quarter objectives. This has set the basis for a thorough examination of forward-looking changes under a nine-month bailout package, which is expected to be finished in March of next year.

According to the ministry, he also "felicitated the government's efforts as well as measures taken in some critical areas" and emphasized how crucial it is to keep up these efforts in order to maintain the nation's economic stability.

Porter reportedly asked Pakistani officials about the upcoming general elections and the operation of the Special Investment Facilitation Council, the two most important matters influencing the political and economic environments of the nation, according to The Express Tribune newspaper.

The announcement that Pakistan's general elections would go place on February 8 put an end to the suspense surrounding the eagerly anticipated polls in the financially challenged nation, shortly after the IMF-Pakistan inaugural session on Thursday. Following a meeting with President Arif Alvi at the Supreme Court's request, the announcement was made.

Although the IMF has not specifically imposed any such requirement, the Ministry of Finance will have more negotiating leverage if the election date is certain. The Federal Board of Revenue (FBR) Chairman Amjed Zubair Tiwana, the Chairman of the Securities and Exchange Commission of the United States of Pakistan, Akif Saeed, the Finance Secretary Imdadullah Bosal, senior finance ministry officials, alongside several IMF delegates were present at the occasion. Esther Perez Ruiz, the IMF's resident representative in Islamabad, also attended.

According to the Dawn newspaper, Akhtar provided an update on Pakistan's official stance about the status of the USD 3 billion Standby Arrangement (SBA) short-term loan deal as well as an explanation of the fiscal measures being implemented to enhance the country's economic standing.

Above the program's requirements for the first quarter of the fiscal year, these actions in order included a stringent oversight on the expenditures, both in terms of minimizing the development program and reducing subsidies alongside provincial fiscal controls. This led to higher-than-targeted primary surplus as well as non-revenue collections.

Higher-than-expected revenue collections were recorded not only at the end of the first quarter but additionally in October, the first month of the second quarter, as a result of conversations the finance minister and additional members of her team had with the visiting team regarding general comprehensive reforms and the actions taken by the FBR.

The government team also provided the IMF's mission chief with an update during the review talks regarding the current state of the circular debt in the power sector, which was in compliance with the indicative targets because the consumer-end tariff had been rebased in July as mandated by the structural benchmark.

The government's approaches to addressing the circular debt issue as mandated by the SBA were also reported to the IMF team. These included updates on the government's efforts in the gas and power sectors, especially the recent decisions to significantly raise natural gas tariffs to the point where no new circular debt would be added in the current fiscal year.

Additionally, the government informed the IMF that the levy on petroleum development focuses on for the first quarter had not only been met, but had now surpassed the indicative target for the entire fiscal year to achieve an average of Rs 55 per litre of levy on gasoline and diesel. This was because the rate for both products had been raised to Rs 60 in the second quarter to help generate a cushion for any potential fiscal slippage due to unforeseen factors.

According to sources, the central bank's goals for Net International Reserves (NIR) were likewise largely in line with the first-quarter target of negative USD 14.55 billion. However, the second-quarter target of negative USD 13.8 billion NIR may present difficulties, as the year's total disbursements from bilateral and multilateral sources are expected to be USD 12.2 billion, which includes USD 5.45 billion in the first quarter and USD 6.73 billion in the second.

According to officials, technical-level talks with pertinent ministries and agencies would start on Friday, pick back up on Monday, and go on for the whole week.

The FBR, the SBP, and important state-owned firms, in addition to representatives of the Benazir Income Support Program, would be the primary targets of previous failures and growing fiscal slippages, with the IMF team interacting with them over the course of the next week.

The two parties are anticipated to take a break over the weekend and begin a policy-level conversation in light of these technical conversations, with the review scheduled to conclude on November 16.

The crucial conversations would still center on quarterly national accounts, public investment management evaluation action plans connected to climate change, and structural changes, primarily in State Owned Enterprises (SOEs). The two parties are anticipated to take a break over the weekend and begin a policy-level conversation in light of these technical conversations, with the review scheduled to conclude on November 16.

According to the article, Finance Minister Akhtar also restated the government's commitment to working closely with the IMF to guarantee the SBA's successful conclusion and accomplish economic goals.

The international lender with its headquarters in Washington granted the first payment of USD 1.2 billion in addition to authorizing the USD 3 billion loan in July of this year. Despite being effectively a bridging loan, it provided Pakistan, which was struggling with a severe balance of payments crisis and declining foreign currency reserves, with much-needed reprieve.

Pakistan's faltering economy has forced it to contact other countries in search of financial assistance in the form of loans.