ADB flags delay in IMF deal over discrepancies

The Asian Development Bank has said that Pakistan’s agreement with the International Monetary Fund for a $1 billion tranche was delayed due to fiscal discrepancies, a claim the government has disputed, calling them “statistical differences.”

In its latest Asian Development Outlook report, the ADB noted that uncertainty surrounding the delay in reaching a staff-level agreement impacted Pakistan’s financial markets, contributing to rising risk premiums and equity losses. The lender projected Pakistan’s economic growth at 3.5% for the current fiscal year, slightly below official expectations.

The finance ministry rejected the characterization of discrepancies as a major issue, stating that the reported Rs413 billion gap reflected differences between civil and cash accounting methods and had already been shared with the IMF as a routine statistical matter.

ADB projects gradual economic recovery for Pakistan amid risks

Pakistan eventually reached the staff-level agreement with the IMF after a delay of about three weeks. The IMF’s executive board is expected to approve the tranche in early May, followed by a mission to Islamabad to finalise the next fiscal year’s budget.

The ADB cautioned that while Pakistan’s economy has stabilised, structural challenges remain. It warned against pursuing rapid growth without addressing key issues in energy, taxation, trade, and state-owned enterprises, as this could undermine macroeconomic stability.

The report also highlighted external risks, particularly rising geopolitical tensions in the Middle East, which could drive up oil prices, inflation, and import costs. Inflation is projected to average above 6% in the current and next fiscal years.

Despite these risks, the ADB noted that continued reforms, improved macroeconomic conditions, and increased private investment could support gradual economic recovery if policy discipline is maintained.