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Sources: Pak, IMF commence discussions at the policy level for a new bailout package starting today

Policy-level discussions are anticipated to revolve around the size of the bailout package.

Pakistan and the IMF’s visiting staff mission will commence talks on Monday regarding a new bailout program, as per sources.

The negotiations will center on determining the magnitude and terms of the new loan package. They are also expected to conclude the objectives and conditions for the upcoming fiscal year.

Furthermore, future fiscal targets for both tax and non-tax revenue will be established, along with defining macroeconomic objectives for the next fiscal year.

Sources indicate that negotiations aim to reach a finalized agreement on the new loan program by the week’s end.

Upon the conclusion of the policy-level discussions, an IMF staff-level agreement is expected.

The IMF mission is conducting a comprehensive review of Pakistan’s economic targets and performance and is slated to meet with Prime Minister Shehbaz Sharif this week.

The outcome of the policy-level negotiations will pave the way for a new IMF program to bolster Pakistan’s economic recovery endeavors.

Although Pakistan has not disclosed the loan amount it seeks from the Fund, Bloomberg News reported in February that it could be at least $6 billion. The country is reportedly seeking to negotiate an Extended Fund Facility with the IMF.

Last month, Pakistan successfully concluded a short-term $3 billion program, preventing a sovereign default. However, Prime Minister Shehbaz Sharif’s government emphasizes the necessity for a new, extended-term program.

In its recent staff report, the IMF recognized Pakistan’s economic progress but cautioned that the outlook remains difficult, with significant downside risks persisting.

Pakistan narrowly escaped default last summer, and its $350 billion economy has stabilized since the previous IMF program, with inflation dropping to approximately 17% in April from a peak of 38% last May.

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