The International Monetary Fund (IMF) expects an agreement with Pakistan this week on targets for the first review of a $3 billion bailout, IMF Managing Director Kristalina Georgieva said on Wednesday, clearing the way for additional funding.
"I expect an agreement of the review to come within this week," she said in an interview with Bloomberg News. Tax collection is the primary issue for Pakistan, Georgieva told Bloomberg, with the IMF asking Islamabad to boost tax collections to at least 15% of gross domestic product (GDP) from the current 12%.
An IMF mission has been in Pakistan for the last two weeks for technical- and policy-level talks to review whether the government was on track to meet benchmarks set under a standby arrangement in July. Pakistan has already received the first tranche of $1.2 billion. The IMF mission will conclude its visit to Islamabad on Wednesday. A Pakistani finance ministry official said Islamabad would likely receive the next tranche of $710 million, its second under the bailout arrangement, in December.
The official was speaking on condition of anonymity because he was not authorised to disclose details of the talks. "I think everything is on track," he said.
"We're meeting all our revenue targets. Our fiscal and policy measures are in line with the review. There is largely agreement on all benchmarks."
The official added, however, that the IMF expressed some concern over external funding and government expenditures, which it would like to see pared back. Georgieva commended Islamabad for sticking to the programme despite financial and political challenges.
Pakistan needs nearly $24 billion of external financing in the current fiscal year to next June, finance ministry officials have said. When the last-gasp nine-month IMF bailout was agreed on in July, the nation of 241 million was teetering on the verge of default. It faced an acute balance of payment crisis, with its foreign exchange reserves diminished to barely three weeks of controlled imports, along with historically high inflation and an unprecedented currency devaluation.
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