By: Vibhuti Pathak
As Pakistan’s fiscal position shows signs of improvement, discussions between Prime Minister Shehbaz Sharif and IMF Managing Director Kristalina Georgieva at the World Economic Forum in Riyadh centered on a new loan program. Sharif underscored the significance of the standby arrangement in averting a default on external liabilities.
The £796 million disbursement represents the final installment of Pakistan’s £2.3 billion standby arrangement secured last summer to address pressing economic challenges.
Pakistan’s economy, facing a chronic balance of payments crisis, is burdened with nearly £19 billion in debt and interest repayments for the upcoming fiscal year—exceeding its central bank’s foreign currency reserves threefold. Despite challenges, the government anticipates a 2.6 percent growth rate for the fiscal year ending in June, with inflation projected to decrease to approximately 20 percent by the same period.
Finance Minister Muhammad Aurangzeb aims to secure a staff-level agreement on a new, larger long-term Extended Fund Facility (EFF) agreement with the IMF by early July. The exact loan amount remains undisclosed, pending formal requests and ongoing discussions between the Fund and the Pakistani government.
The IMF emphasizes the need for sustained policy and reform efforts to facilitate Pakistan’s transition from stabilization to a robust and sustainable economic recovery.
