Pakistan is expected to request an IMF rescue package exceeding $8 billion

NEW DELHI: Strapped for cash, Pakistan intends to formally seek a rescue package from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF), which enables a more comprehensive and extended package.

It is expected that Islamabad would request a package of more than eight billion US dollars during the next spring meetings of the Bretton Woods Institutions, sometimes referred to as the IMF/World Bank, which are set to take place in Washington, DC, from April 15–20.

According to reports, Pakistan’s finance minister, Muhammad Aurangzeb, will lead a team to the discussions that included the governor of the State Bank of Pakistan, Jamil Ahmed, the secretary of EAD, Kazim Niaz, and finance secretary Imdadullah Bosal.
Pakistan, which has been experiencing economic hardship for a long time, is predicted to ask for an increased quota, just as it did in 2008 when the Pakistan Peoples Party (PPP) government obtained 70% of its quota.
As Pakistan qualifies for the EFF owing to the severe climate deterioration in recent years, the second option is to increase it via a climate financing instrument.
The sources said that the IMF review team is in Pakistan to finish the second review as part of the $3 billion standby arrangement (SBA) programme and to disburse the USD 1.1 billion third and final tranche. On the bigger EFF initiative, however, talks are underway, according to ANI, a news agency that cited Geo News.
The IMF was previously advised by the Pakistani government not to provide more funding for the China-Pakistan Economic Corridor (CPEC). Islamabad has declared that it will not be allocating further funding to settle Chinese power projects’ outstanding debts.
Concerns over Pakistan’s ability to effectively combat energy theft have been voiced by the IMF. Ministry of Energy officials said that the IMF had asked the government what it intended to do with money for Chinese power projects beyond the PKR 48 billion budgeted for this fiscal year.
They made it clear that they had no plans to sanction further money to pay off the debts of Chinese power plants. By the end of January 2024, the outstanding debt from CPEC power projects had risen to an astounding PKR 493 billion, or $1.8 billion, a substantial increase from the previous year.