Cash-Strapped Pakistan Makes Formal Request To IMF For Another Bailout

New Delhi: Amid the ongoing financial strain, Pakistan has requested a bailout package from the IMF. According to the reports, Pakistan aims for a sum ranging from USD 6 to USD 8 billion which is potentially augmented by climate financing. In order to finalize the specifics of a three-year rescue program under the Extended Fund Facility (EFF), the nation has also urged the IMF to deploy a review mission next month. By May 2024, when important issues have been resolved, the precise scope and duration of this package will be decided, according to Geo News from Washington.

A delegation led by Finance Minister Muhammad Aurangzeb is presently in Washington to attend the annual spring meetings of the IMF/World Bank. Despite Pakistan's optimistic portrayal of its economy, the IMF's latest Regional Economic Outlook for the Middle East and Central Asia highlighted the country's worsening external buffers. IMF primarily point at the ongoing debt servicing, including Eurobond repayments.

The IMF suggested that countries facing inflationary pressures, including Pakistan, should maintain tight monetary policies and adopt a data-driven approach. IMF also emphasized the debt-ridden country to  closely monitor inflation risks. Pakistan faced a contraction in growth in 2023. The growth is projected to rebound to 2% in 2024, supported by positive base effects in agriculture and textiles.

Finance Minister Aurangzeb told the World Bank in Washington that Pakistan's economy could potentially reach USD 3 trillion by 2047 if key reforms are fully implemented. Pakistan's current USD 3 billion arrangement with the IMF is set to expire in late April. This has prompted the government to seek a larger and longer loan to sustain macroeconomic stability and facilitate necessary structural reforms. The IMF stressed that prioritizing reforms to revitalize Pakistan's economy is more crucial than the size of the new loan package being negotiated.