The International Monetary Fund (IMF) has asked Pakistan to reduce expenses before talks on the ninth review of a $7 billion loan programme.

Discussions between Pakistan and the IMF are still underway, but no party has reached a broad agreement on a revised macroeconomic framework for the current fiscal year.

According to The News, the ninth review’s conclusion and the distribution of the $1 billion tranche might not happen until the following calendar year 2023 as a result of the ongoing negotiations.


The discussions went on for weeks, but the two parties were unable to agree to begin policy-level discussions to wrap up the approaching ninth review by the end of November.

Although both Pakistan and the international lender are keeping quiet and refusing to make any public statements, rumours in the background indicate that the talks broke down due to disagreements over the revised macroeconomic and fiscal framework that Islamabad had prepared and shared with the IMF.

Pakistan must now put in a lot of effort to finish the review by the first week of December 2022. If the negotiations are successful next month, the IMF will ultimately release the next tranche in January 2023 because the Christmas and New Year holidays start after that date. The Executive Board of the multilateral lender will meet the following year to approve Pakistan’s next tranche.

The News had approached both IMF and Finance Ministry officials to inquire about the exact schedule for the conclusion of the pending review. One close aide of Minister for Finance Ishaq Dar stated that “discussions were going on Zoom. Insha Allah soon (the review will be concluded).”

The new macroeconomic and fiscal framework for 2022–23 is being contested by the IMF because it thinks the goals are unattainable and at odds with actual conditions.

The government anticipated nominal growth in the range of 25 per cent, with real GDP growth of 2 per cent and an average inflation rate of 23 per cent, however, the other numbers did not line up with the revised nominal growth estimates.

The government has not revised the $7.47 trillion yearly objective set by the Federal Board of Revenue (FBR). The IMF, however, thinks that the reduction of imports may result in a shortfall for the tax collector. Second, assuming FBR met its goal, the tax-to-GDP ratio would decline even lower because it did not equal the nominal growth statistics of 25 per cent. Third, the aim of Rs2 trillion in non-tax revenue also might not be met.

The government had set a target of Rs855 billion before the next budget, therefore the IMF highlighted that the petroleum development levy may not completely materialise. Because the government was unable to impose a fee of Rs50 per litre on diesel and because the consumption of petroleum products fell by 21 per cent, the levy target may now be reduced downward to Rs500 billion.

Another obstacle to reaching agreement was the government’s failure to pass legislation and reforms to the energy industry.

Given that the State Bank of Pakistan’s (SBP) reserves currently stand at $7.8 billion, the delay in finalising the IMF agreement could exacerbate the economic problems already plaguing the nation.