The government and the International Monetary Fund (IMF) began the 7th Economic Review Talks in Doha on Wednesday, the Ministry of Finance confirmed in a tweet.
“Talks with the IMF Mission started today. Finance Minister Mr. Miftah Ismail, MoS Dr. Aisha Ghous Pasha, Finance Secretary Hamed Yaqoob Shaikh, Acting Governor SBP Dr. Murtaza Syed, Chairman FBR Mr. Asim Ahmad and senior officers from Finance Div joined virtually,” the ministry stated.
A day earlier, the finance ministry had said that a team of the Finance Division had left for Doha for consultations with the IMF mission.
“If negotiations with the IMF are successful, Pakistan’s stalled programme will restart and it will get the next instalment ($1 billion) of the loan.”
It also said that talks would be held with the IMF team to review the conditions set by the previous PTI government and seek relief from the fund.
The talks were held for the first time after Prime Minister Shehbaz Sharif came to power in April last month and after the talks, Finance Minister Miftah Ismail had said that he had asked the IMF to increase the value and duration of the loan programme.
At a news conference in Washington, he said that the IMF had largely agreed, but formal talks were now under way.
According to an AFP report, Pakistan has repeatedly sought international support for its economy, which has been hit by crippling national debt, galloping inflation and a plummeting rupee.
The talks are expected to continue into next week.
A major sticking point is likely to be over costly subsidies — notably for fuel and electricity — and Finance Minister Miftah Ismail said he wants the two sides to “find a middle ground”.
“The government will try to convince the IMF that for political stability purposes it is important to keep at least some of the subsidies,” said economist Shahrukh Wani.
“The IMF will possibly, rightly, say that these are unsustainable and they should be rolled back to make the trade and budget deficit manageable,” he added.
A six billion dollar IMF bailout package signed by former prime minister Imran Khan in 2019 has never been fully implemented because his government reneged on agreements to cut or end some subsidies and to improve revenue and tax collection.
Islamabad has so far received $3 billion, with the programme due to end later this year.
Officials are seeking an extension to the programme through to June 2023, as well as the release of the next tranche of $1 billion.
Pakistani Prime Minister Shehbaz Sharif, who took power with a coalition that removed Khan in a no-confidence vote last month, has vowed to jumpstart the moribund economy, but analysts say his fragile government has failed to take tough decisions.
“It’s an administration that has refused to take hard political steps to bring eventual economic relief — but that’s exactly the sacrifice it must make by going to the IMF,” said Michael Kugelman, deputy South Asia director at the Wilson Center in Washington.