ISLAMABAD - Talks between Pakistan and International Monetary Fund (IMF) for the second review under the $6 billion Extended Fund Facility (EFF) have started on Monday to review the economic situation of the country.

Talks are expected to last for around two weeks. After completing its second review, the IMF would take a decision to release $450 million to Pakistani government.

Pakistan has so far received $1.44 billion from IMF in two tranches. The IMF in July 2019 had approved a 39-month extended arrangement under EFF for Pakistan for an amount of about $6 billion.

The ongoing talks would review the economic situation of the country in second quarter (October to December) of the current fiscal year.

The meetings will discuss technical and policy decisions. Technical level discussion to be followed by policy level talks, which are expected to end on February 14.

During the technical level discussions, the exchange of data would take place relating to revenue collection as well as energy sector reforms particularly with regard to circular debt and tariff adjustment and other reforms agreed under the programme.

The visiting IMF delegation would consider the performance of various ministries and government departments, and in particular, finance, Federal Board of Revenue, State Bank of Pakistan, energy and privatization commission and others.

The IMF delegation met with Adviser to PM on Finance and Revenue Abdul Hafeez Shaikh, Governor State Bank of Pakistan Reza Baqir.

Earlier, Hafeez Shaikh said that talks between Pakistan and IMF started on Monday. Pakistan and IMF are holding talks under $6 billion Extended Fund Facility programme. 

The IMF is helping Pakistan in economic reforms, Shaikh said while talking to the media. 

He claimed that Pakistan’s currency has appreciated against the US dollar. He said that the government has taken measures to control the soaring inflation, which would reduce gradually.

The government had decided to import wheat to control its prices in the country.

The government had also given subsidy to 72 percent power consumers. “We had also announced given subside package worth of Rs7 billion at Utility Stores Corporation”.  “Funding for Ehsaas Programme will be doubled with support from the IMF”.

He said that vegetables prices increased due to seasonal impact and rates will reduce soon.

“Provincial governments should take steps to control inflation and take action against profiteers”. 

Hafeez Shaikh informed that federal government had not taken loan from State Bank of Pakistan in order to control the inflation. Similarly, it had also reduced its expenditures.  “Foreign investors are taking interest to invest in Pakistan, as foreign investment is coming from all over the world”.

Pakistani officials would brief the Fund on autonomy of State Bank of Pakistan, and recently amended National Electric Power Regulatory Authority (NEPRA) Act. The Economic Coordination Committee (ECC) had earlier this month approved an amendment in the NEPRA Act. The amended NEPRA act would help the government to recover losses from power consumers by imposing new surcharges. It would also help in generating than Rs250billion annual revenue to “address” the mounting circular debt. Besides this, NEPRA would be empowered to determine and automatically notify quarterly tariffs under the IMF benchmarks.

Officials said that IMF might ask Pakistan to announce a mini-budget to overcome the shortfall in tax collection. Tax collection shortfall had swelled to Rs383 billion in seven-month period. The FBR has collected Rs2408 billion as compared to the actual target of Rs2791 billion and Rs2552 billion revised target. The International Monetary Fund (IMF) had already agreed with the government of Pakistan to downward revise the tax collection target to Rs5238 billion from original Rs5550 billion.