IMF Eyes Shifting Back to 3-Month Reviews As Pakistan Struggles to Achieve Targets

The International Monetary Fund (IMF) is contemplating a shift back to a quarterly review schedule for Pakistan’s $7 billion bailout program following early program challenges. The lender has not made a decision yet but this move would facilitate closer monitoring of approximately 40 program conditions, reported Express Tribune. In July, the IMF board approved the bailout with an initial disbursement of $1.1 billion. The remaining funds are scheduled in six biannual tranches based on the successful completion of reviews. The first review was initially set for March next year, but fiscal, tax, and external financing challenges made the lender come in early. Pakistan’s previous program also followed a quarterly review structure, which allowed the IMF to enforce stronger compliance. Despite increased withholding rates, the IMF has raised concerns over the Federal Board of Revenue’s limited tax recovery from the real estate sector. Further challenges surround the National Fiscal Pact, where provincial governments, particularly Punjab, have yet to pass the required agriculture tax laws. This impasse impacts the fiscal surplus target. The lender is expected to extend technical support for the pact’s full implementation to align provincial expenditures with constitutional responsibilities.