Pakistan makes formal request to IMF for another bailout: Report

Pakistan has formally approached the International Monetary Fund  (IMF) asking for the next bailout package in the range of $6 to $8 billion with the possibility of augmentation through climate financing. Pakistan has also requested the IMF to send a review mission next month to finalise details of a new three-year bailout package under the Extended Fund Facility (EFF), a GEO News report said.

A delegation from Pakistan, headed by Finance Minister Muhammad Aurangzeb, is in Washington for the IMF/World Bank spring meetings. Despite Pakistan's positive economic outlook, the IMF's latest report highlights the country's worsening external buffers due to ongoing debt repayments, including Eurobonds.

Recently, the IMF reached a staff-level agreement on the final review of Pakistan's stabilisation program under a $3 billion standby arrangement approved last July, paving the way for continued support and collaboration.

"Where inflationary pressures persist, monetary policy should remain tight and follow a data-dependent approach (Egypt, Kazakhstan, Pakistan, Tunisia, Uzbekistan), while closely monitoring risks of a reversal of inflation developments," it added.

After contracting in 2023, growth in Pakistan is projected to rebound to 2 per cent in 2024, supported by continuing positive base effects in the agriculture and textile sectors.

Meanwhile, Finance Minister Aurangzeb told the World Bank in Washington that with the reform agenda fully implemented in key areas, Pakistan's economy has the potential to grow to USD 3 trillion by 2047.

Pakistan's current $3 billion arrangement with the IMF runs out in late April and the government is seeking a longer and bigger loan to help bring permanence to macroeconomic stability and an umbrella under which the country can execute much-needed structural reforms.

Earlier this week,  Aurangzeb told Bloomberg News that Pakistan needs two to three years to implement some of the structural changes the IMF has suggestedto break the South Asian country’s chain of financial struggles and bailouts.
 
“Once we get into the execution, we will need a two- to three-year time period so we can actually go through the structural reforms,” said Aurangzeb, who previously worked at JPMorgan Chase & Co. 

“If we don’t go through the structural reforms, unfortunately we’ll still be looking for another programme,” he added.

In another piece of news, India has taken a tough stance on IMF's bailout plan for Pakistan. India, earlier this week, said that  “stringent monitoring” of any emergency funds given to Pakistan should be done so that such funds are not redeployed towards defence bills or repayment of loans from other countries.

India's position was presented by its representative, executive director Krishnamurthy Subramanian, to the IMF committee during a recent evaluation of a $3 billion short-term Stand-By Arrangement (SBA) provided to Pakistan in July. India typically refrains from voting on Pakistan's loan requests, as was the case last July with the SBA approval.

(With PTI inputs)