Pakistan Secures $1.1 Billion IMF Loan After Final Review (Sources)

Pakistan and the International Monetary Fund (IMF) have completed a staff-level review of a $3 billion standby arrangement, with potential disbursement of $1.1 billion for the South Asian nation, according to two officials familiar with the discussions. These funds constitute the final tranche of a crucial rescue package Pakistan secured last summer, preventing a sovereign debt default. During a five-day visit to Islamabad, the IMF mission engaged in meetings with Pakistani officials to assess the fiscal consolidation targets outlined in the loan agreement.

The second and concluding review was finalized late on Tuesday, as per the officials, who requested anonymity due to the confidential nature of the discussions. The IMF is expected to announce the outcome on Wednesday. Neither a finance ministry spokesperson nor the local IMF office responded to requests for comments. Finance Minister Muhamad Aurangzeb has indicated that Pakistan intends to pursue another IMF bailout once the current standby arrangement expires on April 11.

The IMF has expressed readiness to design a medium-term program if Islamabad submits an application. While the government has not officially disclosed the amount of additional funding sought through a successor program, Bloomberg reported in February that Pakistan aimed to secure a new loan of at least $6 billion from the IMF. The country's debt-laden economy, which contracted by 0.2 per cent last year and is projected to grow around 2 per cent this year, faces significant challenges including low reserves, a balance of payment crisis, 23 per cent inflation, policy interest rates at 22 per cent, and a sharp depreciation of the local currency.

Prior to the standby arrangement, Pakistan had to meet stringent IMF conditions, including revising its budget, increasing interest rates, enhancing revenue through taxation, and raising electricity and gas prices, all of which contributed to inflationary pressures.

April 28, 2024 8:19 p.m. 147

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