Pakistan has formally requested the International Monetary Fund (IMF) for a new bailout package ranging between $6 to $8 billion under the Extended Fund Facility (EFF), with the possibility of augmentation through climate financing, as reported by The News on Saturday.
However, the exact size and timeframe of the bailout package will be determined after consensus is reached on the major contours of the program in May 2024.
The News reached out to members of the Pakistani delegation currently attending the annual spring meetings of the IMF/World Bank in Washington but received no response at the time of filing the report.
Pakistan has expressed its interest and requested the dispatch of an IMF review mission in May 2024 to finalize details of the next bailout package, which is expected to span a three-year period under the EFF program.
While Pakistani authorities paint a positive picture of the economy, the latest Regional Economic Outlook (REO) released by the Middle East and Central Asia (ME&CA) department of the IMF highlighted the deterioration of Pakistan’s external buffers, primarily due to ongoing debt service obligations, including Eurobond repayments.
The IMF report recommended that countries facing inflationary pressures, including Pakistan, should maintain tight monetary policy and adopt a data-dependent approach. It projected Pakistan’s growth to rebound to 2% in 2024 after contracting in 2023, supported by positive base effects in the agriculture and textile sectors.
Finance Minister Muhammad Aurangzeb informed the World Bank in Washington that with key reforms implemented, Pakistan’s economy could potentially grow to $3 trillion by 2047. Pakistan aims to finalize the contours of the new IMF loan in May, and talks have commenced with ratings agencies to facilitate a return to international debt markets.
Aurangzeb disclosed that Pakistan would seek additional financing from the IMF under the Resilience and Sustainability Trust once the IMF loan is agreed upon. The country also aims to re-enter international capital markets, possibly through issuing a green bond, although further groundwork is required before this can materialize.
