Pakistan has formally requested a new bailout package from the International Monetary Fund (IMF), seeking between USD 6 billion to USD 8 billion. The country has also proposed the possibility of additional funding through climate financing. The request includes asking the IMF to send a review mission next month to finalize details for a three-year bailout under the Extended Fund Facility (EFF). However, the exact size and duration of the package will only be determined after reaching a consensus on the key elements of the program in May 2024.
“A high-level delegation led by Finance Minister Muhammad Aurangzeb is currently in Washington for the IMF/World Bank annual spring meetings. Despite portraying a positive outlook on the economy, Pakistan’s external buffers have weakened, largely due to ongoing debt servicing, including Eurobond repayments, according to the IMF’s latest Regional Economic Outlook (REO) for the Middle East and Central Asia.”
“The IMF advised that countries facing inflationary pressures, including Pakistan, should maintain tight monetary policy and closely monitor risks. Pakistan’s economy is projected to grow by 2% in 2024, rebounding from a contraction in 2023, supported by positive base effects in agriculture and textiles.”
“Finance Minister Aurangzeb informed the World Bank in Washington that Pakistan’s economy could reach USD 3 trillion by 2047 if key reforms are fully implemented. The current USD 3 billion IMF arrangement is set to expire in late April, and the government aims to secure a larger and longer-term loan to establish macroeconomic stability and facilitate essential structural reforms.”
“The IMF stressed that implementing reforms to revive Pakistan’s economy is more important than the size of the new loan package being negotiated.”