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30-04-2024
Bureau Report + Agencies
ISLAMABAD: Pakistan Prime Minister Shehbaz Sharif discussed a new loan program with IMF Managing Director Kristalina Georgieva on Sunday, his office said in a statement.
Sharif and Georgieva met on the sidelines of the World Economic Forum in Riyadh.
Islamabad is seeking a new, larger long-term Extended Fund Facility (EFF) agreement with the fund after a current $3 billion standby arrangement expires this month.
“Both sides also discussed Pakistan entering into another IMF program to ensure that the gains made in the past year are consolidated and its economic growth trajectory remains positive,” Sharif’s office said.
The IMF executive board will meet on Monday to discuss the approval of $1.1 billion of funding for Pakistan, which is the second and last tranche of the standby arrangement.
Islamabad secured the arrangement last summer, helping it to avert a sovereign default.
Pakistan’s Finance Minister, Muhammad Aurangzeb, has said Islamabad could secure a staff-level agreement on the new program by early July.
Islamabad says it is seeking a loan over at least three years to help achieve macroeconomic stability and execute long-overdue and painful structural reforms, though Aurangzeb has declined to detail what seize of program the country seeks.
Islamabad is yet to make a formal request, but the Fund and the government are already in discussions.
If secured, it would be Pakistan’s 24th IMF bailout.
The $350 billion economy faces a chronic balance of payments crisis, with nearly $24 billion to repay in debt and interest over the next fiscal year, three-time more than its central bank’s foreign currency reserves.
Pakistan’s finance ministry expects the economy to grow by 2.6% in the fiscal year ending in June, while average inflation for the year is projected to stand at 24%, down from 29.2% the previous fiscal year.
Earlier, Pakistan hopes to agree the contours of a new International Monetary Fund loan in May, Finance Minister Muhammad Aurangzeb told Reuters, and has kicked off talks with ratings agencies to lay the groundwork for a return to international debt markets.
The country’s current $3 billion arrangement with the fund runs out in late April and the government is seeking a longer and bigger loan to help bring permanence to macroeconomic stability as well as an umbrella under which the country can execute much needed structural reforms, the minister said.
“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,” said Aurangzeb, who met with the Fund’s Managing Director Kristalina Georgieva on Wednesday during the International Monetary Fund and World Bank Spring Meetings.
He declined to outline what size program the government hoped to secure, though Pakistan is expected to seek, opens new tab at least $6 billion. Aurangzeb added that once the IMF loan was agreed, Pakistan would also request additional financing from the Fund under the Resilience and Sustainability Trust.
The struggling South Asian nation had managed to accumulate foreign exchange reserves in recent months and was on track for its war chest to hit $10 billion – or roughly two months import cover, by end-June.
The debt situation also looked more benign, Aurangzeb said.
