An International Monetary Fund (IMF) mission and the Government of Pakistan have made significant progress toward reaching a staff-level agreement for an extended fund facility, reported 24NewsHD TV channel.

In a statement posted on its website on Friday, the IMF said the Fund has opened discussions with Pakistan on a new loan programme after Islamabad last month completed a short-term $3 billion programme, which helped stave off a sovereign debt default.

According to the end-of-mission IMF statement, the Pakistan authorities and the global lender have made “significant progress” towards reaching a staff-level agreement (SLA) on a new loan programme.

The IMF mission, which concluded its visit on May 23, was in Islamabad to discuss Pakistan’s pursuit of a longer, larger Extended Fund Facility (EFF).

“Building on the economic stabilisation achieved through the successful completion of the 2023 Stand-by Arrangement (SBA), the IMF and the Pakistani authorities made significant progress toward reaching a Staff Level Agreement (SLA) on a comprehensive economic policy and reform programme that can be supported under an Extended Fund Facility (EFF),” IMF Mission Chief to Pakistan Nathan Porter was quoted as saying in the statement.

“The authorities’ reform programme aims to move Pakistan from economic stabilisation to strong, inclusive, and resilient growth.

“To achieve this, the authorities plan to continue to strengthen public finances to reduce vulnerabilities by improving domestic revenue mobilisation through fairer taxation while scaling up spending for human capital, social protection, and climate resilience; secure energy sector viability, including reforms to reduce the high cost of energy; continue progress towards low and stable inflation by appropriate monetary and exchange rate policies; improve public service provision through state-owned enterprise (SOE) restructuring and privatization; and promote private sector development, by securing a level-playing field for investment and stronger governance.

“The mission and the authorities will continue policy discussions virtually over the coming days aiming to finalise discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan’s bilateral and multilateral partners.

“The IMF team is grateful to the Pakistani authorities, private sector, and development partners for fruitful discussions and their hospitality throughout this mission.”

Pakistan’s $3-billion SBA concluded last month, but authorities in Islamabad have been keen to pursue a 24th bailout with the IMF, hoping that a longer, larger EFF will put it on the path of permanence when it comes to economic stability and reform.

Reporter Waqas Azeem