Pakistan, IMF begin talks on $7 billion loan review

Pakistan and the International Monetary Fund have begun talks online on a ninth review of a $7 billion loan programme, the Finance Ministry said on Monday, after a media outlet reported that the lender had asked the country to cut its expenses.

The government has shared fiscal data, including for floods and related expenditures, with the IMF, and a team from the agency is expected to visit Islamabad soon, the ministry added.

Under the IMF’s Extended Fund Facility (EFF), Pakistan secured a $6 billion bailout in 2019 that was topped up with another $1 billion earlier this year.

“As part of the 9th review under the EFF, remote discussions continue between IMF staff and the Pakistani authorities over policies to re-prioritize and better target support toward humanitarian and rehabilitation needs,” the lender’s resident representative, Esther Pérez Ruiz, told Reuters in a statement.

Pakistan has been reeling from floods this year that killed more than 1,700 people, destroyed farmland and infrastructure and exacerbated an economic crisis marked by decades-high inflation and dwindling foreign exchange reserves.

“The IMF understands that the floods have changed the macroeconomic assumptions on which the programme was designed,” the ministry told Reuters. “Detailed analysis is being conducted by their team using the data provided.”

Pakistan reserves stood at $7.8 billion as of Nov.18, barely enough to cover imports for a month.