IMF Delays Staff-Level Agreement with Pakistan Over Fiscal Discrepancies

Talks between International Monetary Fund and Pakistan ended without a staff-level agreement after the global lender raised concerns over fiscal discrepancies in the country’s financial data, delaying the release of the next loan tranche.

Officials said discussions between the IMF mission and Pakistani authorities made significant progress but did not conclude with an agreement for the approval of the next $1 billion tranche under the country’s $7 billion Extended Fund Facility programme. Negotiations are expected to continue as both sides attempt to resolve the remaining issues.

The IMF reportedly raised concerns about inconsistencies in fiscal data reported by federal and provincial governments. According to officials, a fiscal discrepancy of around Rs413 billion was recorded during the first half of the current fiscal year, including about Rs71 billion in the federal government’s accounts.

Sources said the discrepancies were largely linked to increased commercial bank deposits, reporting delays, and accounting adjustments between financial institutions and government departments.

Other issues discussed during the negotiations included tax collection targets, dividend earnings from state-owned entities, and certain government expenditures. The IMF has suggested that a technical mission may review and reconcile the fiscal data before a final agreement is reached.

Despite the delay, officials noted that progress was made in discussions on fiscal reforms, maintaining strict monetary policies to control inflation, and improving the financial stability of the energy sector.

The staff-level agreement is considered essential for Pakistan to receive the next tranche of funding under the IMF programme, which aims to stabilise the country’s economy and strengthen its public finances.