Pakistan has formally requested a bailout package from the International Monetary Fund (IMF) in the range of $6 to $8 billion under the Extended Fund Facility (EFF), with the possibility of additional funding through climate financing. The exact size and duration of the package will be determined after consensus is reached on the major aspects of the program in May 2024.
Members of the Pakistani delegation, currently in Washington D.C. for the annual spring meetings of the IMF/World Bank, have not responded to messages sent by The News.
Pakistan has expressed interest in hosting an IMF review mission in May 2024 to finalize details of the three-year bailout package under the EFF program.
While Pakistani authorities paint a positive picture of the economy, the latest Regional Economic Outlook (REO) from the IMF’s Middle East and Central Asia (ME&CA) department indicates that Pakistan’s external buffers have weakened, largely due to ongoing debt servicing, including Eurobond repayments.
The IMF projects a rebound in Pakistan’s growth to 2 percent in 2024, supported by positive base effects in the agriculture and textile sectors. However, growth in the Middle East and North Africa (MENA) emerging markets and middle-income economies (EM&MIs), including Pakistan, is expected to accelerate to nearly 4 percent in 2025, with challenges such as high levels of debt and inflation persisting.
Finance Minister Muhammad Aurangzeb has stated that Pakistan aims to reach an agreement on the contours of the new IMF loan in May. Talks have also begun with ratings agencies to prepare for a return to international debt markets.
Aurangzeb mentioned that Pakistan would seek additional financing from the IMF’s Resilience and Sustainability Trust once the loan agreement is finalized. The government also hopes to return to international capital markets, potentially through issuing a green bond.
During meetings with officials from the World Bank, the UK, Saudi Fund for Development, and Citibank, the finance minister discussed various investment opportunities and projects. He also conveyed condolences to China following a terrorist attack against Chinese nationals in Pakistan and reaffirmed Pakistan’s commitment to their safety and security.
