Mission shifts third EFF, second RSF reviews to virtual talks after US travel advisory
The government has agreed to the need for a mini-budget if revenues fall short of expectations by end-December 2025, according to the IMF. Photo: file
ISLAMABAD:
The International Monetary Fund (IMF) decided on Monday to prematurely end its visit to Pakistan due to heightened security conditions and will now hold virtual discussions from Türkiye to reach a staff-level agreement for the $1.2 billion worth next loan tranches.
The mission left Pakistan soon after holding its first face-to-face meeting with Finance Minister Muhammad Aurangzeb on Monday morning. The development came a day after the United States issued a security update placing Pakistan at Level 3, advising its citizens to reconsider travel.
The US has advised its citizens to reconsider travel to Pakistan and “exercise caution, avoid large gatherings”, while declaring some areas Level 4, which are prohibited for travel.
“An IMF mission led by Iva Petrova has started discussions with the authorities in Karachi and Islamabad on the third review of Pakistan’s Extended Fund Facility (EFF) arrangement and the second review of the Resilience and Sustainability Facility (RSF),” according to a brief statement issued by Mahir Binici, the IMF’s Resident Representative for Pakistan.
Binici said that the “discussions will continue to be held virtually.” Finance ministry officials said that the IMF team would hold virtual discussions from Türkiye, hoping that the change would not impact the programme review talks. The IMF mission had arrived in Pakistan on February 25 till March 11. But due to the United States and Israel’s “illegal and unprovoked” attacks on Iran, the war has spread to the Middle East region.
Protesters have also marched towards US missions and consulates in Pakistan, resulting in the killing of a few protesters and damage to public property. Sources said that Pakistan’s interior minister had assured full security to the IMF mission, but it nevertheless decided to call off the face-to-face meetings.
According to a statement issued by the US embassy in Pakistan on Monday, the embassy was “monitoring reports of ongoing demonstrations at the US Consulates General in Lahore and violent protests at the US Consulate General in Karachi, as well as calls for additional demonstrations at US Embassy Islamabad and US Consulate General Peshawar.” US government personnel were directed to restrict their movements until further notice, and its citizens in Pakistan were advised to monitor local news, observe good personal security practices, including being aware of surroundings, and avoid large crowds.
During the opening session with the finance minister, Iva Petrova, the IMF’s Mission Chief to Pakistan, emphasised the need for implementing sustainable reforms to back the recent momentum in economic growth. She was of the view that growth was on a sustainable path, but cannot be sustained unless reforms are implemented and revenues are increased to meet targets. Petrova also mentioned the importance of improving social indicators, particularly ensuring the needed spending in the health and education sectors.
Due to the sudden departure of the IMF mission, scheduled meetings regarding the status of amendments in the Sovereign Wealth Fund, updates on e-procurements by various governments, exchange of information with the National Accountability Bureau (NAB), and eliminating preferential treatment to the government and military-owned companies in public procurements were cancelled.
A meeting on the revenue performance of the Federal Board of Revenue (FBR) and the outlook for the remainder of the fiscal year was also cancelled. The FBR has missed its first eight months of this fiscal year’s downward revised tax target by Rs432 billion.
However, a virtual meeting with the FBR took place on risk-based verification and publication of asset declarations of high-level federal and provincial civil servants. Sources said that the IMF was informed that there were challenges in implementing the asset disclosure scheme for provincial government employees due to lack of training of commercial banks. It was agreed that the central bank and the Financial Monitoring Unit would undertake training sessions for the banks.
But the Global Think Tank Network (GTTN) – an independent body – has found serious flaws in the IMF’s approach to dealing with the issue of assets beyond means by bureaucrats.
The GTTN said that the 2018 Governance Framework emphasises even-handed application, committing the IMF to address macro-critical governance risks with comparable rigour across member states. In principle, similar vulnerabilities should attract similarly robust enforcement mechanisms.
The think tank said that comparative experience, however, suggests variation in intensity. In Ukraine’s 2014 programme, asset declaration reforms were embedded within an independent verification system, supported by public access and criminal penalties for false reporting. In Pakistan, by contrast, verification mechanisms remain limited and sanctions comparatively weak. While country contexts differ, this divergence raises questions about the consistency of even-handed application with which macro-critical governance standards are translated into enforceable reform design, according to GTTN.
