Low on funds Pakistan formally requests another bailout from the International Monetary Fund

According to a media source on Saturday, Pakistan has formally requested from the IMF to seek the next bailout package, which might be increased by climate funding and be valued between USD 6 and USD 8 billion.

Low on funds Pakistan has further asked for the International Monetary Fund (IMF) review team to be sent to the following month in order to finalize the terms of the next three-year bailout package under the Extended Fund Facility (EFF).

Geo News reported from Washington that the precise scope and duration of the new package won’t be known until an agreement has been reached on the main features of the next program, which is expected to happen in May 2024.

Leading a high-level group from Pakistan is Finance Minister Muhammad Aurangzeb, who is now in Washington for the IMF/World Bank’s annual spring meetings.

While Pakistani officials present a positive image of the country’s economy, the IMF stated in the most recent Regional Economic Outlook (REO) published by Middle East and Central Asia (ME and CA) that the cash-strapped nation’s external buffers declined, primarily due to continuous debt service, which includes Eurobond repayments.

“In countries like Egypt, Kazakhstan, Pakistan, Tunisia, and Uzbekistan where inflationary pressures are still present, monetary policy ought to be stringent and data-driven, and the risks of a reversal of inflation trends should be closely monitored,” the statement said.

Pakistan’s growth is predicted to recover to 2% in 2024 after declining in 2023, helped by ongoing favorable base effects in the textile and agricultural industries.

Pakistan’s economy has the potential to reach USD 3 trillion by 2047 if the reform plan is properly executed in key sectors, as Finance Minister Aurangzeb said at the World Bank in Washington.

The present USD 3 billion agreement between Pakistan and the IMF expires in late April, and the country’s leadership is looking for a longer-term, larger loan to assist maintain macroeconomic stability and provide a roof under which the nation may carry out urgently required structural reforms.

Nonetheless, the IMF emphasized that the magnitude of the current loan package under negotiation is not as important as putting measures to revive Pakistan’s economy first.