Talks between Pakistan and the International Monetary Fund (IMF) on the third biannual economic review are under way, with the international lender's team continuing discussions for a second day in Karachi with officials of the State Bank of Pakistan.

The IMF delegation is in Karachi for negotiations under two key loan programmes, the Extended Fund Facility and the Resilience and Sustainability Facility. The first phase of talks for the third review of the loan programme is in progress. Officials of the State Bank of Pakistan (SBP) have shared technical data with the delegation.

Sources said the IMF team sought the rollover of $2 billion dollars in deposits from the United Arab Emirates for one year, to which State Bank officials have given an assurance. The IMF delegation will travel to Islamabad next week, where negotiations with the federal government will commence from Monday.

Discussions with representatives of the provincial governments will include a review of provincial performance, while preliminary talks will also be held on the forthcoming budget. During the visit, the IMF delegation is reviewing shortfalls in tax collection, issues in the power sector, provincial fiscal discipline and institutional reforms, among other sectors.

If the review concludes successfully, Pakistan is likely to receive a tranche of approximately 1.2 billion dollars. The amount is expected before April, ahead of the new budget.

The government has maintained that most targets have been achieved and that economic stability has returned. However, revenue shortfall remains an issue and certain reforms, including those in the energy sector, are progressing slowly. The IMF mission will remain in Pakistan until March 11, during which an outline of the next budget and economic reforms will also be prepared.