IMF delegation to arrive in Pakistan for loan talks

ISLAMABAD: A delegation from the International Monetary Fund (IMF) is set to arrive in Pakistan tonight to engage in discussions aimed at securing the release of the next tranche under the standby programme.

Negotiations with the IMF are scheduled to take place from March 14 to 18, with the potential release of a $1.1 billion installment contingent upon successful talks, according to sources.

The visit of the IMF review mission is also expected to include discussions on a new loan programme.

In preparation for the negotiations, a meeting chaired by Finance Minister Muhammad Aurangzeb was convened at the Ministry of Finance.

Finance Minister Muhammad Aurangzeb emphasized the critical nature of the IMF programme for Pakistan, stating that talk alone was insufficient, and concerted efforts were required to navigate the country through its challenges.

Acknowledging the anticipated difficulties of the current financial year 2024, Aurangzeb pledged to address issues transparently and vowed to utilize all available resources to overcome Pakistan’s obstacles, stressing the importance of translating words into action.

Pakistan plans to seek a new loan of at least $6 billion from the International Monetary Fund to help the new government repay billions in debt due this year, Bloomberg News reported, citing a Pakistani official.

The country will seek to negotiate an Extended Fund Facility with the IMF, the report said, adding that the talks with the global lender were expected to start in March or April.

According to Reuters, Pakistan averted default last summer thanks to a short-term International Monetary Fund bailout, but the programme expires next month and a new government will have to negotiate a long-term arrangement to keep the $350 billion economy stable.

Ahead of the bailout, Pakistan had to undertake a slew of measures demanded by the IMF, including revising its budget, a hike in its benchmark interest rate, and increases in electricity and natural gas prices.

The IMF staff continues a dialogue with authorities on needed longer-term reform efforts, a spokesperson for the fund said, adding that the fund is available, if requested, to support the post-election government through a new arrangement to address Pakistan’s ongoing challenges.

Pakistan’s vulnerable external position means that securing financing from multilateral and bilateral partners will be one of the most urgent issues facing the next government, ratings agency Fitch said earlier.

“A new deal is key to the country’s credit profile, and we assume one will be achieved within a few months, but an extended negotiation or failure to secure it would increase external liquidity stress and raise the probability of default,” it said.