IMF Bailout Package
ISLAMABAD: Pakistan is gearing up to formally request a larger and extended bailout package from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF).
According to a report, the country is eyeing a fresh bailout package exceeding $8 billion. This request is anticipated to be made during the upcoming spring meetings of the IMF/World Bank in Washington, DC, scheduled from April 15 to 20.
Leading the delegation will be Minister for Finance Muhammad Aurangzeb, accompanied by Finance Secretary Imdadullah Bosal, Secretary EAD Kazim Niaz, and Governor State Bank of Pakistan Jamil Ahmed.
The delegation aims to engage in discussions regarding the possibility of securing a larger and longer-term EFF program.
There are two potential avenues for Pakistan to pursue this objective. Firstly, the country may seek an enhanced quota similar to the one obtained in 2008, during the Pakistan Peoples Party (PPP) government, when Islamabad secured 700% of its quota.
Alternatively, Pakistan could explore augmenting the EFF through climate finance instruments, given its vulnerability to climate degradation in recent years.
The ongoing IMF review mission in Pakistan is currently focused on completing the second review under the $3 billion standby arrangement (SBA) program. Discussions are also underway regarding the larger EFF program. If negotiations are successful, the IMF is expected to release the final tranche of $1.1 billion by April 12.
To expedite discussions, the IMF mission has shortened its duration in Pakistan, holding talks from March 14 to 18 to draft the Memorandum of Economic and Financial Policies (MEFP) within a limited timeframe.
Pakistan may also consider the possibility of requesting the IMF for a Resilience and Sustainability Facility (RSF), which offers affordable long-term financing to address macro-critical risks associated with climate change and pandemic preparedness, thereby strengthening economic resilience and sustainability.
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