Pakistan’s High-Stakes IMF Talks: Key Issues And Economic Pressures

The Prime Minister of Pakistan has planned to meet with IMF MD to address economic issues in the country and ask for further assistance from the IMF.

PM Shehbaz to meet IMF chief in Dubai:

On Tuesday (today), it is expected that Prime Minister of Pakistan Shehbaz Sharif will meet International Monetary Fund (IMF) Managing Director Kristalina Georgieva in Dubai. The agenda behind this meeting is not exposed. However, critics relate it to the coming significant $1 billion loan review meeting that is scheduled to start on March 3. 

According to the sources, this meeting will take place on the sidelines of the World Governments Summit. The information shared regarding this meeting makes clear that Pakistan has called this meeting in order to cope with the economic challenges the country is facing today. Pakistan can also discuss the second loan tranche under the IMF program in this meeting. 

Also Read: Massive Tax Fraud Uncovered At Karachi Export Processing Zone

Pakistan met with the IMF MD three times in the last ten months. However, the Prime Minister, along with Deputy Prime Minister Ishaq Dar and the other cabinet members, left for Dubai on Monday. The Finance Minister is on his visit to Lisbon, Portugal. He will join the members after his return. 

Key focus of the meeting:

The purpose of the meeting is yet to be open. The chances are high that Pakistan will address the economic concerns and IMF conditions on economic reforms. The IMF has emphasised the need for macroeconomic stability, sustainable growth, and tax reforms.

The IMF MD, in last year’s meeting, confirmed that the IMF will support Pakistan in combating the economic challenges. However, the upcoming review will be critical in determining whether Pakistan secures the next loan instalment.

Economic pressures and business lobbying:

The government faces intense pressure from the real estate industry, the salaried class, the business community, and teachers. The real estate industry demands lower transaction taxes on plots. Investors demand policies that encourage economic growth. The salaried class finds difficulty in managing expenses with a limited salary. In addition, the high inflation rate and heavy taxation severely impacted employees. That is why they want some measures to ease their burden. Teachers also demand some taxation relief.

PM Shehbaz postponed a key meeting last week regarding tax relief for the real estate sector. Instead, he formed a cabinet-led task force to propose tax reductions. However, no such task force has been created to address inflation and taxation issues affecting the salaried class.

IMF review talks and Pakistan’s readiness:

An official meeting regarding the loan review of $1 billion will start from March 3 to 14 in Islamabad. Finance Minister Muhammad Aurangzeb has expressed confidence in meeting IMF conditions. However, concerns remain over the Federal Board of Revenue’s (FBR) ability to meet tax collection targets. Amendments to the Pakistan Sovereign Wealth Fund Act also remain pending.

IMF governance and corruption assessment in Pakistan:

An IMF delegation is already in Pakistan for a Governance and Corruption Diagnosis Assessment. On Monday, they held discussions with the Financial Monitoring Unit and the Money-Laundering and Combating of Financing of Terrorism Authority.

The IMF team will meet with the Supreme Court and the Judicial Commission of Pakistan this week. The ongoing assessment will conclude on February 14, but a follow-up mission may visit in April for further evaluations.

Pakistan will publish the assessment report in July. The recommendations could introduce additional economic conditions, adding to the 40 measures already agreed upon in the $7 billion loan program.

Challenges ahead:

A successful IMF review is crucial for Pakistan’s economic stability. If the program falters, it could undermine financial markets and investor confidence. The government must balance tax reforms, economic relief, and IMF conditions to sustain growth while securing essential funding.