In a significant move aimed at stabilizing Pakistan’s economy, Prime Minister Shehbaz Sharif held discussions with IMF Managing Director Kristalina Georgieva during the World Economic Forum Special Meeting in Riyadh. The talks revolved around securing a new long-term Extended Fund Facility (EFF) to replace the current $3 billion Stand-By Arrangement (SBA) set to expire this month.
PM Shehbaz reaffirmed his government’s dedication to revitalizing Pakistan’s economy, emphasizing the need for structural reforms and fiscal discipline. He expressed gratitude for the IMF’s support in securing the previous SBA and stressed the importance of continued collaboration to maintain economic growth.
The potential new bailout package, estimated to range between $6 to $8 billion under the EFF, aims to address Pakistan’s macroeconomic challenges and facilitate much-needed reforms. Discussions on the package’s specifics, including size and duration, are expected to evolve in May 2024, with Pakistan also requesting an IMF review mission to solidify details.
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Finance Minister Muhammad Aurangzeb highlighted the country’s intention to secure a staff-level agreement on the new program by early July. The proposed loan, spanning at least three years, aims to achieve macroeconomic stability amidst a mounting balance of payments crisis and impending debt repayments.
Pakistan’s economic outlook remains a focal point, with projections of 2.6% growth for the fiscal year ending in June, accompanied by efforts to curb inflation. However, challenges persist, with significant debt obligations looming and foreign currency reserves under strain.
If finalized, this would mark Pakistan’s 24th IMF bailout, underscoring the nation’s ongoing struggle to achieve sustained economic stability amid global economic uncertainties.