International Monetary Fund (IMF) chief Kristalina Georgieva has confirmed that Pakistan is seeking a potential fresh bailout package following the completion of the $3 billion Stand-By Arrangement (SBA) that is set to expire on April 12.
The News reported on Tuesday that Pakistan has decided to formally approach the IMF for the medium-term Extended Fund Facility (EFF) during the upcoming annual spring meetings of the Breton Wood Institutions (BWIs).
Speaking at an event at the Atlantic Council think tank, the IMF chief said Pakistan is in discussions with the global lender on a potential follow-up programme to its nine-month SBA and highlighted that the country had important issues to solve, according to Reuters news agency.
She also acknowledged the improvement in the country’s economic situation, saying Pakistan was successfully completing its existing programme with the IMF and its economy was performing somewhat better, with reserves now being built up.
“There is a commitment to continue on this path, and the country is turning to the fund for potentially having a follow-up programme,” Georgieva added.
“There are very important issues to be solved in Pakistan: the tax base, how the richer part of society contributes to the economy, the way public spending is being directed and of course, creating … a more transparent environment.”
Pakistan and the IMF last month reached a staff-level agreement on the second and last review of the $3 billion stand-by arrangement, which, if cleared by the global lender’s board, will release about $1.1 billion to the struggling South Asian nation.
The IMF’s board is expected to review the matter in late April, but no firm date has been set, a spokesperson said.
Both sides have also spoken about negotiating a longer-term bailout and continuing with necessary policy reforms to rein in deficits, build up reserves, and manage soaring debt servicing.
The size and duration of the upcoming bailout package will be worked out by the IMF’s review mission expected to hold talks, probably from the first week of May 2024 to finalise major contours of the upcoming bailout package.
“We are all set to make a formal request to IMF during the upcoming annual spring meetings of BWIs known as the IMF and World Bank from April 15 to 20, 2024 in Washington DC as Pakistan’s delegation led by minister for finance will attend it,” top official sources confirmed while talking to The News on Tuesday.
The sources said Pakistan decided to make a request for augmenting the EFF through climate finance, so there was a possibility for securing $6 to $8 billion size of the upcoming programme.
“We are going to present our argument before the IMF management that Pakistan faced severe consequences of climate degradation and deserved support from the international community and donor agencies,” said the sources. Islamabad will make a request for the EFF with the possibility of augmenting through climate finance.
