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IMF Mission to Arrive in Pakistan Next Week to Negotiate New $6-8 Billion Loan Program

A team from the International Monetary Fund (IMF) will visit Pakistan next week to discuss a new loan program, the lender’s Resident Representative in Pakistan Esther Perez Ruiz said in a brief statement.

Ruiz said the team, led by the Fund’s Mission Chief Nathan Porter, will engage with Pakistani authorities to discuss their next phase of engagement.

Ruiz said these upcoming talks will help establish a framework for improved governance and foster more inclusive and resilient economic growth that benefits Pakistan.

The IMF team’s visit is expected to last over 10 days. The lender will gather data from various departments and negotiate with the Finance Division on the upcoming budget for the fiscal year 2024-25.

Pakistan has requested for a new bailout package of up to $8 billion for at least 3 years under the Extended Fund Facility, with the potential for additional climate financing.

Last month, Finance Minister Muhammad Aurangzeb said that he expects to reach a Staff-Level Agreement on a bigger loan program with the IMF by June-July 2024.

In its latest “Second and final review under the Stand-By Arrangement (SBA)”, IMF lowered the projection of Pakistan’s gross external financing needs to $21.044 billion for next fiscal year 2024-25 i.e. 5.5 percent of GDP against $24.965 billion i.e. 7.1 percent of GDP for the outgoing fiscal year.

The lender said Pakistan’s capacity to repay the Fund is subject to significant risks and remains critically dependent on policy implementation and timely external financing. The Fund’s exposure reaches SDR 6,546 million (322 percent of quota, approximately 102 percent of projected gross reserves at end-April 2024) with completion of all purchases under the SBA.

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 jeopardize policy implementation and erode repayment capacity and debt sustainability, IMF added.

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