Finance Minister Muhammad Aurangzeb on Tuesday held a kick-off meeting with the International Monetary Fund (IMF) mission, which is in Islamabad “for the fourth review of Pakistan’s Extended Fund Facility (EFF) arrangement and the third review of the Resilience and Sustainability Fund (RSF)”

“Finance Minister Aurangzeb today held a kick-off meeting with the IMF mission, led by Iva Petrova. The IMF mission is in Islamabad for the fourth review of Pakistan’s EFF arrangement and the third review of the RSF, said the finance ministry in a statement on X.

In September, the IMF approved a $7 billion new bailout package after Pakistan promised to overhaul its agriculture income tax, transfer some fiscal responsibilities to provinces and agree to limit subsidies. Executive Board of the IMF approved the 37-month EFF totalling $7 billion. It also authorised the immediate release of the first loan tranche of less than $1.1 billion. It is the 25th IMF programme that Pakistan has obtained since 1958 and the 6th EFF.

Last week, Prime Minister Shehbaz Sharif also held a meeting with the IMF Managing Director Kristalina Georgieva on the sidelines of the 81st UN General Assembly. Speaking to The Express Tribune after meeting IMF chief, the prime minister said he had briefed her in detail on the pressure Pakistan faces and the difficulties confronting low-income people.

PM Shehbaz said the IMF had not expressed any serious concerns over Pakistan’s targeted subsidy of Rs100 per litre. Later, in a post on X, the IMF managing director hailed Pakistan’s implementation of reforms, saying they had helped preserve stability, restore confidence and regain market access.

Earlier this month, PM Shehbaz announced a special relief scheme offering Rs100 per litre off petrol for motorcycles, three-wheeler rickshaws, and cars with engines up to 800cc, in an attempt to shield lower-income consumers from the impact of rising petroleum prices.

Successful completion of both reviews could pave the way for around $1.2 billion in financing for Pakistan, including about $1 billion under the economic programme and $200 million under the climate facility.

Beginning the talks in Karachi earlier this month, the monetary body began Article IV consultations – a comprehensive and deeper dive to gauge the health of Pakistan’s economy.

On the opening day of talks, the IMF had a bird’s-eye view of Pakistan’s macroeconomic outlook and the external sector situation in light of the Middle East conflict and its implications for Pakistan’s economy, according to officials privy to the discussions. They said that the IMF would seek the federal government’s perspective on the macroeconomic outlook during its visit to Islamabad.

Read: FinMin reviews reform progress with IMF leadership, reaffirms commitment to economic transformation

The successful culmination of the IMF talks would result in a recommendation to the board for the release of $1.2 billion worth of two tranches and publication of a comprehensive Article IV report, which would become the base for any future engagement with Pakistan.

However, sources said that the IMF’s concerns remained about the lack of implementation of structural reforms aimed at improving the governance of state-owned enterprises, continued market interventions and the lack of transparency in the budget with reference to large statistical discrepancies. The government surpassed the IMF’s condition to produce a primary budget surplus – calculated after excluding interest payments.

However, the IMF raised concerns about Rs853 billion in statistical discrepancies, the sources added. The global lender is expected to hold detailed meetings on the discrepancy in accounts of the last fiscal year, they added.

Pakistan had missed the condition that the five governments would cumulatively spend Rs3.47 trillion on health and education. The condition had been missed by a wide margin of Rs370 billion. This could prove one of the difficult points for Pakistani authorities.