IMF talks to unlock next $1.2bn set to begin today

ISLAMABAD: Pakistan's government and a delegation from the International Monetary Fund (IMF) are set to commence formal negotiations today for the fourth assessment of the $7 billion Extended Fund Facility (EFF) and the third evaluation of the Resilience Support Facility (RSF). Mission leader Iva Petrova and her team are expected to remain in the country for nearly two weeks until the start of October, conducting the reviews.

Pakistan is currently under an IMF-backed 37-month programme aimed at economic stabilization via fiscal restraint, structural reforms, and long-term growth initiatives. Successful completion of the reviews would grant Pakistan access to approximately $1 billion (760 million Special Drawing Rights) under the EFF and an additional $200 million under the RSF by the close of November or early December, summing up to $1.2 billion.

Meanwhile, Finance Minister Aurangzeb clarified on Sunday that the government is not procuring aircraft for Pakistan International Airlines (PIA) through sovereign financing. This comes after claims on social media suggested a minister was negotiating a sovereign-linked loan for the aircraft. The finance minister's comments came following talks between Aurangzeb and John Jovanovich, Chairman of the US Export-Import (Exim) Bank, at the 81st session of the United Nations General Assembly in New York.

The discussions touched on the Reko Diq mining project and potential funding opportunities for procuring Boeing 787 Dreamliners for PIA. However, Khurram Schehzad, Adviser to the Finance Minister, emphasized in a post on X that the US Exim's mandate is to support the exports and jobs of its own country. Boeing aircraft are manufactured in the United States, and the US Exim provides financing support to foreign buyers of US-manufactured aircraft via established financing frameworks.

Asset-backed aircraft financing, where loans are secured against the aircraft itself and assessed based on the airline/lessee or guarantor, if available, is a possibility. Unrelated to PIA, discussions between Aurangzeb and Jovanovich covered financing options for aviation, refinery upgrades, and Reko Diq, as part of a wider Pakistan-US economic collaboration.