Pakistan has approached the International Monetary Fund (IMF) for a bailout package ranging from $6 to $8 billion, aiming to augment this with climate financing. The Finance Minister of Pakistan is leading a delegation in Washington for discussions with the IMF/World Bank, seeking approval for a new three-year bailout package under the Extended Fund Facility (EFF) to address the country's economic challenges amidst ongoing debt repayments and faltering external buffers highlighted in the IMF's latest report.
In an effort to bolster its economy, Pakistan recently concluded a staff-level agreement on the final review of its stabilisation program under a $3 billion standby arrangement, ensuring continued support from the IMF. The IMF emphasized the need for tight monetary policy to combat persisting inflationary pressures and highlighted the potential for Pakistan's growth to rebound to 2% in 2024 if supported by positive base effects in key sectors such as agriculture and textiles.
Finance Minister Aurangzeb expressed Pakistan's ambition to achieve a $3 trillion economy by 2047 through complete implementation of key reform agendas. With Pakistan's current IMF arrangement set to expire soon, the government is eager to secure a larger and longer loan to sustain macroeconomic stability and implement necessary structural reforms. Aurangzeb stressed the importance of a two to three-year period for executing the IMF-suggested structural changes to break Pakistan's cycle of financial struggles and reliance on bailouts.
In contrast, India has taken a stern position regarding the IMF's assistance to Pakistan, advocating for stringent monitoring of emergency funds to prevent their diversion towards defense expenses or repayment of loans from other nations. India's refusal to vote on Pakistan's previous loan requests underscores the tense dynamics surrounding financial aid to Pakistan, with India's representative highlighting concerns over the utilization of funds provided to Pakistan.