Pakistan, IMF to hold talks on 'new loan this week'

IMF official says team is meeting authorities this week to discuss next phase of engagement with Pakistan

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The International Monetary Fund logo is seen inside the headquarters in Washington, US, October 9, 2016. — IMF

  • There is a mission on the ground, confirms Julie Kozack.
  • Says will communicate findings of mission in due course.
  • Pakistan has requested for fresh bailout package of $6-$8bn.

In a sigh of relief for the cash-strapped nation, an International Monetary Fund (IMF) team led by Nathan Porter will meet Pakistani authorities this week to discuss a new bailout programme under the Extended Fund Facility (EFF), confirmed the global lender on Friday.

Addressing a press briefing, IMF Communication Director Julie Kozack said: “Right now, a mission team led by Nathan Porter, our mission chief, is meeting with the authorities this week to discuss the next phase of our engagement with Pakistan.”

Last week, the IMF support team reached Pakistan to hold talks regarding the South Asian nation's request for a fresh bailout package under the EFF. Pakistan has made a formal request for a fresh bailout package of $6-$8 billion under the EFF with the possibility to be augmented through climate finance.

Responding to a question, Kozack said: “On April 29th of this year, our Executive Board completed the second review of the stand-by arrangement for Pakistan, allowing a disbursement of about $1.1 billion.

“The completion by our Board of the second and final review of the stand-by arrangement reflected the authority's strong policy efforts during the time of the standby, which did help stabilisation of the economy.”

To another query, she said: “There is a mission on the ground, we will wait for them to complete their work and we will communicate the findings of the mission in due course.”

Earlier this week, a senior official of the IMF confirmed that a team of the Washington-based lender would reach Pakistan to hold talks with Islamabad over a bailout package.

As per IMF's Resident Representative for Pakistan Esther Perez Ruiz, a team led by IMF's Mission Chief to Pakistan Nathan Porter would meet Pakistani authorities "to discuss the next phase of engagement".

She had further stressed that the aim of the negotiations was to "lay the foundation for better governance and stronger, more inclusive, and resilient economic growth that will benefit all Pakistanis".

Sources told Geo News that the team, during their stay which is expected to exceed 10 days, would receive data from different departments and would also discuss the upcoming budget for the fiscal year 2025 (FY2025), with the Ministry of Finance officials.

The Washington-based lender, in its report issued earlier this month, had expressed doubts over Pakistan's ability to successfully repay the Fund.

"Pakistan's capacity to repay the fund is subject to significant risks and remains critically dependent on policy implementation and timely external financing," the IMF said in its report.

It further stressed that: "Exceptionally high risks — notably from delayed adoption of reforms, high public debt and gross financing needs, low gross reserves and the SBP’s net FX derivative position, a decline in inflows, and sociopolitical factors — could jeopardise policy implementation and erode repayment capacity and debt sustainability."

The report highlighted that the country needed gross financing worth $123 billion during the next five years, adding that Pakistan was expected to seek $21 billion in fiscal year 2024-25 and $23 billion in 2025-26.

As per the IMF, Islamabad is expected to seek $22 billion in 2026-27, $29 billion in 2027-28 and $28 billion in 2028-29.

Pakistan 'optimistic about larger bailout programme’

Last month, Finance Minister Muhammad Aurangzeb expressed the expectation of a larger bailout programme from the IMF.

He had said that if the loan is approved, Islamabad would revisit its NFC award that allocates revenues between the federation and the provinces. He added that some of the sectors which need to be brought in a much bigger way into the tax net were provincial markets.

Pakistan is requesting a “larger and longer” multibillion-dollar loan programme from the IMF and discussions are underway with the fund’s officials, the finance minister said, without specifying how much the nation was trying to secure.

Aurangzeb had said once the mission is back in Islamabad, "we are going to agree on the priorities and the principles".

“I believe it is Pakistan’s programme. It is not an IMF programme. It is a Pakistan’s programme and it is supported, assisted and funded by the IMF. What’s the size, and the reality and where we are, it’s premature to talk about that. We have our own views and we’ll share them with the IMF. But I would rather leave it to the joint meetings in terms of the size and the duration of the programme.”