Prime Minister Shehbaz Sharif and International Monetary Fund (IMF) Managing Director Kristalina Georgieva discussed a new loan arrangement on Sunday on the fringes of the World Economic Forum Special Meeting in Riyadh.
According to a statement released by the PM Office, PM Shehbaz reaffirmed his government’s commitment to getting Pakistan’s economy back on track during his first meeting with the head of the IMF after his reelection.
Pakistan’s existing $3 billion Stand-By Arrangement (SBA) is set to expire this month, and the country is now looking for a new long-term counterpart.
The statement continued, “To ensure that the gains made in the previous year were consolidated and its economic growth trajectory remained positive, both sides also discussed Pakistan entering into another IMF program.”
Prime Minister Shehbaz expressed gratitude to IMF Chief Georgieva for helping Pakistan obtain the $3 billion SBA from the global lender last year, which was now almost finished.
The event occurred one day prior to the IMF Executive Board meeting that was scheduled to deliberate on the $1.1 billion last tranche of the $3 billion short-term loan program.
According to the release, IMF head Georgieva praised PM Shehbaz’s leadership for swiftly obtaining SBA last year.
The prime minister said during the meeting that he had given his finance minister, Muhammad Aurangzeb, full authority to oversee the implementation of structural reforms, enforce stringent budgetary restraint, and adopt sensible policies that would guarantee macroeconomic stability and long-term economic growth.
The premier was briefed by the IMF MD about her organization’s viewpoint on the current program, including the review procedure.
The News reports that Pakistan has formally requested from the IMF to seek the next bailout package under the EFF, which may be increased by climate funding and would likely total between $6 and $8 billion.
But the precise scope and duration won’t be known until May 2024, when an agreement has been reached on the main features of the next program.
Pakistan has expressed interest in the EFF program and requested that an IMF review team be sent in May 2024 to finalize the specifics of the next three-year bailout package.
In order to assist attain macroeconomic stability and carry out long-overdue and painful structural changes, Islamabad claims it is seeking a loan for a minimum of three years; nevertheless, Aurangzeb has neglected to specify exactly what kind of program the government is seeking.
If approved, it will be the 24th IMF bailout for Pakistan.
With over $24 billion in debt and interest to pay back over the course of the upcoming fiscal year — three times more than its central bank’s foreign currency reserves — the $350 billion economy is facing a chronic balance of payments problem.
The Ministry of Finance projects that the economy will expand by 2.6% in the fiscal year that ends in June, with average inflation expected to drop from 29.2% to 24%.
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