The executive board of the International Monetary Fund is scheduled to convene on April 29 to discuss the approval of a $1.1 billion funding package for Pakistan, as announced by the fund on Wednesday.
This funding marks the second and final installment of a $3 billion standby arrangement that Pakistan secured last summer to prevent a sovereign default, with the arrangement set to expire this month.
Pakistan is currently pursuing a new, larger, long-term loan from the IMF. Muhammad Aurangzeb, the Finance Minister of Pakistan, has indicated that Islamabad aims to reach a staff-level agreement on the new program by early July.
The government of Pakistan asserts that it requires a loan spanning at least three years to support macroeconomic stability and implement overdue structural reforms. However, Aurangzeb has refrained from disclosing the exact size of the program being sought.
Although Islamabad has yet to formally request the loan, discussions between the Fund and the Pakistani government are already underway.
If secured, this would mark Pakistan’s 24th IMF bailout.
With a $350 billion economy, Pakistan is grappling with a persistent balance of payments crisis, facing the daunting task of repaying nearly $24 billion in debt and interest over the next fiscal year—three times the amount held in its central bank’s foreign currency reserves.
The finance ministry of Pakistan anticipates a 2.6% growth in the current fiscal year, ending in June, while projecting an average inflation rate of 24%, a decrease from the 29.2% recorded in the fiscal year 2023/2024. Inflation reached a record high of 38% in May of the previous year.
