IMF Delegation in Pakistan for Review of $7 Billion Loan Program

A 9-member IMF delegation, led by Nathan Porter, has been in Pakistan for the past few days to review the ongoing $7 billion loan program between the IMF and Pakistan. The delegation is engaged in discussions to assess the current loan agreement, with negotiations taking place in two phases—technical talks in the first phase and policy-level discussions in the second. Separate negotiations will be held with the provinces of Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan. These economic review talks are set to continue until March 15. If successful, Pakistan will receive a $1 billion tranche from the IMF.

However, new demands have emerged from the IMF during these discussions. According to sources, the IMF delegation will provide budget recommendations for the fiscal year 2025-26. The IMF has also set a deadline for Pakistan to declare assets of government officials by September and has instructed the government to launch a digital portal for asset declaration.

In response, the Pakistani government has initiated consultations for the necessary legislation to enforce the declaration of assets by government officials. A decision has been made to amend the Civil Servants Act, requiring officials to disclose not only their assets but also the assets of their spouses, sources of household income, and details of their children’s educational institutions.

Sources also revealed that the IMF delegation has raised new demands regarding the revenue shortfall and right-sizing. The IMF has called for urgent right-sizing measures to reduce costs and has expressed concerns about the shortfall in tax revenue, particularly urging the Federal Board of Revenue (FBR) and the Ministry of Finance to address the gap in the next quarter. The IMF has also insisted on recovering taxes from large retailers in major cities who are outside the tax net to bridge the revenue shortfall.

Additionally, Auditor General Ajmal Gondal informed the Public Accounts Committee that 500,000 to 600,000 audit paras remain pending in various ministries and government departments. The IMF has expressed concern over this backlog and has called for their swift resolution. It was pointed out that there is no internal audit system in any government department, and even the position of Chief Internal Accountant has not been filled. As a result, the committee chairman has sought responses from ministries and departments within one month.

The IMF delegation has also held discussions with the Ministry of Energy and Petroleum, reviewing the performance of the power and petroleum sectors. Sources indicated that the IMF expressed satisfaction with the performance of these sectors and urged the continuation of reforms. The delegation was briefed on the progress of gas sector targets as well.

Furthermore, the IMF delegation was informed about the progress in the privatization of power distribution companies (DISCOs) and the current situation of the circular debt in the power sector. Government sources claimed that the circular debt in the power sector has been largely controlled. By December last year, the circular debt had reached PKR 2,384 billion, slightly down from PKR 2,393 billion in June.