Pakistan makes formal request for fresh IMF package

Pakistan has made a formal request to International Monetary Fund (IMF) for seeking the next bailout package in the range of USD 6 to USD 8 billion under the Extended Fund Facility (EFF), Athe RY News reported on Saturday quoting sources.

According to sources, Pakistan has submitted two applications seeking assistance from the International Monetary Fund (IMF) under two heads – extended fund facility (EFF) and additional climate financing.

The international lender has reportedly approved Pakistan’s request for to USD 8 billion loan under Extended Fund Facility (EFF).

Islamabad is currently awaiting the release of $1.1 billion under the stand-by arrangement (SBA) which was inked during the last days of the PDM-led coalition government and remained effective from July 1, 2023 to March 31, 2024.

Pakistan hopes to agree the contours of a new International Monetary Fund loan in May, Finance Minister Muhammad Aurangzeb told Reuters, and has kicked off talks with ratings agencies to lay the groundwork for a return to international debt markets.

“We expect the IMF mission to be in Islamabad around the middle of May – and that is when some of these contours will start developing,” said Aurangzeb, who met with the Fund’s Managing Director Kristalina Georgieva on Wednesday during the International Monetary Fund and World Bank Spring Meetings.

He declined to outline what size programme the government hoped to secure, though Pakistan is expected to seek, opens new tab at least $6 billion. Aurangzeb added that once the IMF loan was agreed, Pakistan would also request additional financing from the Fund under the Resilience and Sustainability Trust.

The debt situation also looked more benign, Aurangzeb said.

“The bulk of our bilateral debt – including our China debt – is being rolled over, so in that sense I think we are in good shape and I don’t see a big issue during this fiscal year nor next fiscal year, cause we need to repay roughly $25 billion dollars every fiscal year.”

Pakistan also hopes to come back to international capital markets, possibly with a green bond. However, there was some more work to be done before that happens, said Aurangzeb.

“We have to come back into a certain ratings environment,” he said, having kicked off talks with ratings agencies, adding the government was hoping to get an improvement in its sovereign rating in the next fiscal year.

It is pertinent to mention here that the struggling South Asian nation had managed to accumulate foreign exchange reserves in recent months and was on track for its war chest to hit $10 billion – or roughly two months import cover – by end-June.