Pakistan has made a formal request to the International Monetary Fund (IMF) for financial assistance, specifically seeking a bailout package estimated between $6 to $8 billion. The country's finance minister, Muhammad Aurangzeb, is currently in Washington leading a delegation for the IMF/World Bank spring meetings. Despite some positive economic outlook, Pakistan is struggling with worsening external buffers due to ongoing debt repayments, including Eurobonds.
The IMF's staff-level agreement on the final review of Pakistan's stabilisation program under a $3 billion standby arrangement approved last July has set the stage for continued support and collaboration. The IMF's latest report on Pakistan emphasizes the need for tight monetary policy, particularly in the face of persisting inflationary pressures, while also advising vigilance against risks of inflation reversal in certain countries including Pakistan.
Projected growth in Pakistan is expected to rebound to 2% in 2024 after contracting in 2023, mainly supported by positive base effects in the agriculture and textile sectors. Finance Minister Aurangzeb highlighted to the World Bank the potential for Pakistan's economy to reach USD 3 trillion by 2047 if key reforms are fully implemented. The current $3 billion IMF arrangement with Pakistan is set to expire soon, prompting the government to seek a larger and longer loan to support macroeconomic stability and facilitate structural reforms essential for sustainable growth.
Finance Minister Aurangzeb stressed the need for a two to three-year timeframe to implement the structural changes proposed by the IMF to break Pakistan's ongoing cycle of financial struggles and reliance on bailouts. Meanwhile, India has taken a firm stance on Pakistan's bailout plan with the IMF, emphasizing the importance of stringent monitoring to ensure that emergency funds provided to Pakistan are not diverted towards defense expenditures or loan repayments to other countries.