Pakistan to talk with WB, ADB for IMF loan review

Pakistani officials will meet with the World Bank and Asian Development Bank from Monday to discuss progress in addressing the problem of circular debt and improving the power sector, the finance ministry said.

The talks are part of a review of the South Asian country's performance under a $7.6 billion International Monetary Fund (IMF) programme launched late last year to help it avert a balance of payments crisis.

Pakistani officials "successfully" concluded the first round of the review talks with an IMF mission in Turkey this week, the finance ministry said in a statement late on Saturday.

"The second leg of talks with the World Bank and the Asian Development Bank relating to circular debt and improvement in the power sector would start from July 13 in Islamabad," it said.

One of the expected sticking points of the current review process is whether the government will raise electricity tariffs, which the IMF is pressing it to do but which the government has resisted because it would be a politically sensitive move.

The IMF will take into account input from the World Bank and the ADB in concluding its review of Pakistan's progress, the finance ministry said.

Pakistan is looking to secure the roughly $875 million third tranche of its IMF loan, which was originally meant to be disbursed in June. The IMF board is now set to meet by the end of this month to take a decision on the release of the instalment.

The programme has got off to a good start, with inflation easing and the central bank's reserves back above $8 billion after falling to $3.3 billion last November, the IMF said in a report late last month.

But the fight against Taliban militants in the northwest, uncertainties created by the slump in global demand and domestic power shortages all add to the challenge of pulling the economy out of what is likely to be an extended phase of sluggish activity, analysts say. link....