ISLAMABAD - A delegation of International Monetary Fund (IMF) has arrived in Islamabad for holding Article IV consultations.

Pakistan and IMF were scheduled to hold Article IV talks in March this year, which was delayed due to the budget preparations of the previous PML-N government. Later, the caretaker government had also decided not to hold discussions with the Fund and left the matter for the new government. Therefore, the IMF team has arrived to review the economic situation of Pakistan under article IV, which is compulsory for every member country of the Fund. Talks would continue for more than one week.

“The government has not decided yet to take fresh IMF bailout package to avert the balance of payment crisis,” said an official of the ministry of finance. He further said that Pakistan would brief the visiting delegation on the current economic situation of the country, which had recently deteriorated. The government would inform the Fund about its economic policy to bring out country from the current economic crisis, he added.

Talks would be held in two parts, technical and policy level. Pakistan’s technical team would be headed by Finance Secretary Arif Ahmad Khan, Governor State Bank of Pakistan (SBP) Tariq Bajwa and Chairman Federal Board of Revenue Jehanzeb Khan, besides other senior officials from Economic Affairs Division, Ministry of Privatization and Ministry of Energy. Finance Minister Asad would head the policy level talks in a later stage.

Another official claimed that Pakistan might initiate discussions with the IMF for fresh bailout package. There are fewer options available with Pakistan other than IMF, as Pakistan needed $11.7 billion to service its external debt in current fiscal year 2018-19, he explained. He added that current account deficit may touch $21 billion during this year, which is a serious problem for the government. Pakistan’s foreign exchange reserves held by the State Bank of Pakistan had already tumbled to $9 billion, which is enough to cover less than two months imports bill of the country. Meanwhile, the government would have to make heavy repayment. Pakistan will have to repay over $2.522 billion loan in the shape of principal and mark-up amounts during three months period from September to November 2018. It will have to be paid to all international, multilateral and bilateral creditors as well as investors of sovereign bond holders. This would further erode the foreign exchange reserves of the country.

The government would brief the IMF on its mini budget, which was recently announced by the PTI led government to restrict the budget deficit. The government, in mini budget, made fiscal adjustment worth of 2.1 percent of the GDP to restrict the budget deficit.

Finance Minister Asad Umar recently said that government was compelled to introduce amendments in Finance Bill otherwise Pakistan’s budget deficit would have swelled to Rs2.9 trillion (7.2 percent of the GDP) as against the budget estimates of Rs1.89 trillion in current fiscal year, a difference of Rs900 billion. He further said that there was Rs350 billion shortfalls expected in revenue collection and Rs250 billion was more projected in expenditures.