Pakistan has officially commenced negotiations with the International Monetary Fund (IMF) for the first review of a crucial $7 billion bailout package. 

Finance Minister Muhammad Aurangzeb is leading the Pakistani delegation in talks with an IMF team headed by Nathan Porter, the IMF’s Pakistan mission chief.

These talks, which began on Monday, will span approximately two weeks. The first phase will focus on technical aspects of Pakistan’s economic performance from July to December 2024, while the second phase will involve higher-level policy discussions. 

A key element of the review will be the assessment of the 2025-26 budget, currently under development.

A successful review is essential for Pakistan to unlock the next $1 billion tranche of the Extended Fund Facility (EFF) program. 

The IMF team will meet with various Pakistani government institutions, including the Ministries of Finance and Energy, the Planning Commission, the State Bank of Pakistan (SBP), the Federal Board of Revenue (FBR), and regulatory authorities like OGRA and NEPRA. 

Furthermore, separate meetings are scheduled with representatives from Pakistan’s four provinces.

After lengthy talks last year, Pakistan and IMF agreed on a 37-month long Extend Fund Facility program worth $7 billion. The agreement was the first major breakthrough of the new coalition government and first-time Finance Minister Muhammad Aurangzeb.

Since then, the government has claimed to ‘turn around’ the economy including a drastic reduction in the inflation rate. As the inflation rate has gone down, the government has also decreased the interest rate to stimulate activity in the economy.