Pakistan denies ‘hiccups’ in IMF program, reaffirms commitment to reforms agenda

This handout photograph released by the Pakistan Press Information Department (PID) on November 12, 2024, shows Pakistan’s Finance Minister Muhammad Aurangzeb (5L) meeting with a International Monetary Fund (IMF) review mission led by Nathan Porter (3R) at the Finance Ministry in Islamabad on November 11, 2024. (PID/File)

• Statement comes on the heels of local media report that there were “hiccups” in the implementation of IMF program
• IMF is pushing Pakistan to continue prudent fiscal and monetary policies, mobilize revenue from untapped tax bases

ISLAMABAD: Pakistan’s finance ministry on Tuesday denied any “hiccups” in the implementation of a $7 billion IMF bailout program, saying it was progressing “smoothly” and the country was committed to a macroeconomics reforms agenda attached to the loan. 
The finance ministry statement came a day after a major Pakistani newspaper, the Express Tribune, reported that Finance Minister Muhammad Aurangzeb had said in a briefing to the National Assembly Standing Committee on Finance that there were “hiccups” in the implementation of the IMF program. 
The bailout is attached to tough economic reforms, including prudent fiscal and monetary policies, and mobilizing revenue from untapped tax bases.
Pakistan’s $350 billion economy has struggled for decades with boom-and-bust cycles, needing 23 IMF bailouts since 1958.
“The IMF program is proceeding smoothly, with no disruptions, as the government of Pakistan remains fully committed to meeting all the conditionalities and ensuring the successful completion of the 37-month program in close coordination with the IMF staff,” the finance ministry statement said, adding that Aurangzeb had “consistently emphasized upon the government’s continued commitment to macroeconomic reforms.”
Referring to the local media report on the recent briefing to the National Assembly Standing Committee on Finance, the ministry said Aurangzeb had reiterated there that adhering to the IMF program was critical for achieving lasting macroeconomic stability.
“Any speculation regarding “hiccups” in the program’s implementation is based on one’s subjective interpretations and lacks credible evidence,” the finance ministry added. 
“The government remains focused on maintaining economic stability and fulfilling all obligations under the IMF program with diligence and transparency, aiming to lay the foundation for stronger, sustainable, and inclusive growth.”
The IMF, which approved the new bailout in September, has said the program will require “sound policies and reforms” to strengthen macroeconomic stability and address structural challenges alongside “continued strong financial support from Pakistan’s development and bilateral partners.”
The IMF said in its statement on approving the loan that Pakistan had taken key steps to restore economic stability with consistent policy implementation under the 2023-24 standby arrangement.
It added that growth had rebounded to 2.4 percent and inflation has receded significantly, falling to single digits, amid appropriately tight fiscal and monetary policies.
A contained current account and calm foreign exchange market conditions have allowed the rebuilding of reserve buffers, and the central bank of Pakistan has been able to reduce interest rates by 700 bps since June in four consecutive cuts.
Despite this progress, Pakistan’s vulnerabilities and structural challenges remain formidable and the tax base remains too narrow.
The South Asian country is the IMF’s fifth-largest debtor, owing the Fund $6.28 billion as of July 11, according to the lender’s data.