WASHINGTON: In meetings with the top management of the International Monetary Fund, Finance Minister Muhammad Aurangzeb explained to the Fund Pakistan's improved macroeconomic situation and reform progress under its IMF reform program. In Pakistan IMF review reform progress interaction, meetings were held with the highest authorities of the Fund, including Aurangzeb meeting with the First Deputy Managing Director Dan Katz, Deputy Managing Director Nigel Clarke, Director of the Middle East and Central Asia Department Jihad Azour, and Chief of Pakistan Mission Iva Petrova.

The range of the people attending this meeting, from the second most senior official in the Fund itself to the head of the department to the mission head, shows that the IMF engagement with Pakistan is quite deep and sustained.

Revenue Target Attainment — A Brief Reform Report Card of Pakistan

The revenue target attainment assumes greater significance within the backdrop of the IMF program where one of the most closely followed parameters is fiscal performance. The FBR collection amounting to Rs13,010 billion in the fiscal year 26 and the income tax contribution of Rs633 billion by the salaried category indicate that the revenue front has improved enough for Aurangzeb to make it a highlight of the program.

Structural Reform Discussions — The Tougher Agenda

Apart from macroeconomic measures, the Pakistan IMF review meetings discussed the structural reform agenda that will shape Pakistan’s future economy:

• Tax reforms: widening the tax base by moving away from the present focus on withholding taxes on salaried individuals only
  

• Energy sector reforms: dealing with circular debts and making the energy sector financially sustainable
  

• Privatization: covering the newly concluded PIA first closing and Islamabad airport privatization program
  

• Tariff rationalization: ensuring energy and utility tariffs reflect cost recovery requirements
  

• Debt management: managing Pakistan’s foreign debt obligations with respect to reserves
  

• Diversifying sources of financing: avoiding dependence on a single country for all bilateral and multilateral financing support

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Pakistan Gets Appreciation from IMF for Its Programme Ownership

As the IMF review mission came to an end, the Finance Minister thanked the IMF for appreciating Pakistan's programme ownership, which is a term used by the International Monetary Fund to describe the true ownership of the reforms promised by any government.

Programme ownership is the highest level of endorsement by the Fund to the commitment of a member nation towards reforms. This recognition in light of the ongoing program of Pakistan shows that the Fund believes that the government of Pakistan is leading the reform process within its country and is not merely following Fund conditionalities.

Aurangzeb reiterated the commitment of the Government to fiscal prudence, policy credibility, structural reforms, and transformation of economy – the four pillars upon which the Fund wants Pakistan to continue through the rest of the EFF and RSF programs.

Meeting of US EXIM Bank – A Strategy for Commercial Engagement

In yet another meeting held in Washington, the Finance Minister Aurangzeb met with the President & Chairman of US EXIM Bank, John Jovanovic, to explore ways of boosting Pakistan-US economic engagement. Consequently, Pakistan’s IMF reviews and reforms meetings were paralleled with economic engagement of Pakistan with the US.

Discussion held on US EXIM Bank included:

Project financing: specific projects to be financed by US EXIM Bank.
Agricultural trade: enhanced trade in cotton and soybean from Pakistan to USA.
Hydrocarbon: commercial collaboration in energy sector.
Strategic framework: proposal for multi year transaction pipeline comprising priority projects.

the Washington Meetings Mean

Pakistan IMF Review Meetings on Reforms in Washington have many meanings simultaneously, aside from the discussion itself. They mean:

• Commitment on the political side: Aurangzeb directly involves the Fund’s top officials rather than relying on technical experts
  

• Confidence about the programmes: the topics under discussion show that both parties are planning for more cooperation within the programme rather than coping with a difficult situation

Economic ambitions on the bilateral side – the US EXIM Bank model shows that Pakistan is diversifying its economic and trade relations along with the IMF programme
September as the next key date – both the gas circular debt problem IMF solution and the US EXIM Bank model agreement will take place in September