Pakistan is expected to obtain a fresh loan from the IMF: Aurangzeb
According to Finance Minister Muhammad Aurangzeb, Islamabad is on course to obtain a fresh loan from the International Monetary Fund (IMF), a Washington-based lender, as macroeconomic conditions continue to improve for Pakistan.
The finance czar stated, “The fund has been very receptive in terms of agreeing to consider a larger, longer program,” in an interview with The National.
With the potential to be increased through climate funding, Pakistan has formally requested from the IMF another rescue package under the Extended Fund Facility (EFF) valued at $6 to $8 billion.
But the precise scope and duration won’t be decided upon until May 2024, when a consensus has been reached on the main features of the upcoming program.
As it attempts to strengthen its faltering economy, Aurangzeb told the Abu Dhabi-based journal that macroeconomic fundamentals are changing in its favor.
He stated that the rupee has at last stabilized and that by the end of the next year, inflation should be down to single digits.
He went on to say that the cash-strapped country would require assistance for at least three years in order to implement a reform plan that would affect energy and taxation, among other areas.
The director of the global lender for Middle East and Central Asia stated last week that the IMF was prepared to assist Pakistan and that the reform package now matters more than the scope of the new program.
Jihad Azour stated at a news conference on the fringes of the IMF 2024 Spring Meetings, “I think what is important at this stage is to accelerate the reforms, double down on the structure of reforms in order to provide Pakistan with its full potential of growth.”
A staff-level agreement (SLA) was reached between Pakistan and the IMF last month about the completion of the second review and the disbursement of the third tranche, totaling $1.1 billion, under the Standby Arrangement (SBA) program.
Following the SLA’s termination, the IMF verified that the Pakistani government had indicated interest in a follow-up medium-term program funded by the Fund. This program would address Pakistan’s long-term fiscal and external sustainability issues, bolster its economic recovery, and create the groundwork for robust, sustainable, and inclusive growth.
In order to sign the impending medium-term rescue plan for Pakistan’s faltering economy, the IMF has outlined four key criteria.
‘After Islamabad, Lahore and Karachi airports will also be privatised’
The finance minister announced earlier today that two further airports, Jinnah International Airport in Karachi and Allama Iqbal International Airport in Lahore, will be privatized after Islamabad International Airport.
Speaking at a gathering in Dubai, the finance czar announced that negotiations to privatize the Islamabad airport are now under place with Turkish and European companies.
“By July [2024], Pakistan International Airlines (PIA) will be privatized.”
The International Monetary Fund (IMF) is reportedly exerting tremendous pressure on the recently elected administration led by Prime Minister Shehbaz Sharif to privatize publicly traded companies that are losing money. The article claims that one of the key requirements set by the IMF for a rescue package is the privatization of different public-sector firms.
“Economic initiatives are not related to any government but to the country,” stated Finance Minister Aurangzeb.
He said that the successful efforts they had taken to lower the current account deficit were bearing fruit.
The finance minister predicted that foreign exchange reserves will increase to $9–10 billion by June.
The federal minister stated that the global lender was prepared to fund “Digital Pakistan” for ten years, citing his recent discussions with World Bank representatives.
Regarding the economic changes, Aurangzeb declared: “At this time, no amnesty program would be implemented. Taxes will be due by individuals.
The “trust of global lenders has been restored,” the administration said, adding that it was making international payments.
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