The International Monetary Fund (IMF) has raised concerns over the timing of Pakistan’s next general elections and the functioning of the Special Investment Facilitation Council (SIFC) during discussions with Pakistani authorities. The topics were addressed during a meeting between Nathan Porter, the IMF’s mission chief to Pakistan, and interim Finance Minister Dr. Shamshad Akhtar. The outcome of these talks will set the stage for the upcoming 14-day review discussions that are expected to conclude by November 15.
The IMF acknowledged the government’s strong performance during the first quarter of the current fiscal year, particularly in areas where the finance ministry and Federal Board of Revenue (FBR) had surpassed expectations. However, the issues surrounding the next general elections and the effectiveness of the SIFC were raised during the discussions.
The upcoming general elections, scheduled for February 8, have a direct impact on the next IMF program review and any potential new agreement with the IMF. The tentative date for the IMF board meeting for the next review is March 1, implying that the third review for the $1.2 billion tranche should take place in February next year. The current $3 billion IMF bailout is set to conclude in April next year, with the expectation that a new government will enter into another program after the elections.
The SIFC, a civil-military body established to attract foreign investment to Pakistan, has faced scrutiny for its effectiveness. A recent report by the Policy Research Institute of Market Economy (PRIME) expressed concerns that the military’s involvement in economic decision-making may destabilize the country and lead to the failure of key initiatives. However, an SIFC official argued that it is too early to judge the body, which only began working in June this year.
The IMF mission chief outlined the energy sector and tax reforms as the primary areas of discussion during the review talks. The IMF delegation will also review the Circular Debt Management Plan aimed at controlling the circular debt in the power sector. The mission inquired about the government’s policy regarding the supply of gas to fertilizer plants, and the IMF team suggested that fuel prices should be determined by market forces rather than government intervention.
The interim finance minister also assured the IMF of providing a briefing on the Sovereign Wealth Fund, which was established in August to manage the assets of profitable entities. The IMF inquired about the implementation of the state-owned enterprises (SOEs) policy, which has faced delays and implementation issues.
During the discussions, the IMF praised the finance ministry’s performance in the first quarter of the fiscal year, noting that no new supplementary grants were issued during this period, meeting an important IMF condition. The ministry also complied with conditions related to budget deficit restrictions and the petroleum levy on petrol and high-speed diesel.
The IMF has also imposed a condition requiring the FBR to share details of asset declarations by civil servants with commercial banks for customer due diligence. The FBR has met the condition to collect taxes and stay within the limits for tax refunds.
The finance ministry statement noted that Porter appreciated the interim government’s commitment to meeting first-quarter targets and commended its measures in critical areas. Dr. Akhtar, the interim finance minister, expressed her appreciation for the IMF’s continued support and assistance, reaffirming the government’s commitment to achieving economic objectives and completing the stand-by arrangement (SBA).