IMF And Pakistan Officially Start Dialogue For New Loan Program

A delegation from the International Monetary Fund (IMF) led by Mission Chief Nathan Porter arrived at the Finance Division today to officially commence talks on a new loan program.

Sources told ProPakistani the exchange will likely span around two weeks. Apart from a new loan program, both sides will discuss the budget for the upcoming financial year.

Meanwhile, the lender will also gather data from various departments and continue negotiating with the Finance Division on the FY25 federal budget.

Pakistan has requested 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 the 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.

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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