Tue, 28 May 2024
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Pakistan makes formal bailout package request to IMF

20 April, 2024 12:18

Pakistan has made a formal request to the International Monetary Fund (IMF) for the next bailout package in the range of $6 to $8 billion under Extended Fund Facility (EFF).

The current $3 billion arrangement with the IMF will run out in late April and the government is seeking a longer and bigger loan to bring permanence to macroeconomic stability.

With the new package, the country can execute much needed structural reforms, said Finance Minister Muhammad Aurangzeb.

“We expect the IMF mission to be in Islamabad around the middle of May – and that is when some of these contours will start developing,” Aurangzeb told Reuters.

The Finance Minister already had a meeting with the Fund’s Managing Director Kristalina Georgieva on Wednesday during the International Monetary Fund and World Bank Spring Meetings.

Aurangzeb added that once the loan was agreed, Pakistan would also request additional financing from the Fund under the Resilience and Sustainability Trust.

Struggling Pakistan had managed to accumulate foreign exchange reserves in recent months and was on track for its $10 billion by end-June.

The debt situation also looked more benign, Aurangzeb said.

“The bulk of our bilateral debt – including our China debt – is being rolled over, so in that sense I think we are in good shape and I don’t see a big issue during this fiscal year nor next fiscal year, cause we need to repay roughly $25 billion dollars every fiscal year.”

He believes that the country’s economy is on tract but insists that more work to be done.

“We have to come back into a certain ratings environment,” he said, having kicked off talks with ratings agencies, adding the government was hoping to get an improvement in its sovereign rating in the next fiscal year.

“In all likelihood, any international capital markets issuance will likely be in the 2025/2026 fiscal year.”

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