Prime Minister Shehbaz Sharif has reiterated recently the need for moving ahead with a new IMF (International Monetary Fund) programme for a longer period. Therefore, it is likely that after the conclusion of the present nine-month Stand-by Facility, negotiations will commence with the IMF on a new Extended Fund Facility (EFF) of three years.

There is a general apprehension that in view of the extremely vulnerable position of Pakistan with regard to the making of timely external payments, the programme will be extraordinarily tough in terms of the speed of adjustment and degree of rigidity of the agenda of structural reforms.

The objective of this article and the next article is to identify the likely targets in the EFF of key macroeconomic variables over the three-year period, 2024-25 to 2026-27. This will include targets related to the achievement of stabilization of the economy through the containment of the current account deficit in the balance of payments and the budget deficit. This will enable Pakistan to build up its foreign exchange reserves to a ‘safe’ level by the end of the programme.

The methodology adopted to identify the likely targets includes, first, examination of the targets in the previous EFF of Pakistan from 2019-20 to 2022-23, which remained largely unimplemented. Second, we look at the programme targets in the on-going IMF programme of a country like Sri Lanka, which is emerging from a default situation.

Third, the leading party, PML-N (Pakistan Muslim League-Nawaz), which has formed the federal government in a coalition with PPP (Pakistan People’s Party) and other parties, had........

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