Finance Minister Muhammad Aurangzeb stated that Pakistan has submitted a formal request to secure approximately $1 billion in funding from the International Monetary Fund (IMF). This request is part of a facility designed to help manage external economic shocks. Speaking on the sidelines of the IMF/World Bank autumn meetings in Washington, Aurangzeb confirmed the request.
Last month, the IMF approved a bailout for Pakistan, but the country is now seeking additional support through the IMF’s Resilience and Sustainability Trust (RST). Pakistan is also in discussions with the Asian Infrastructure Investment Bank to secure credit enhancement for a planned Panda bond, with an initial issuance ranging from $200-250 million.
PIA Privatisation by November Aurangzeb also mentioned plans to finalise the delayed privatisation of Pakistan International Airlines (PIA) and the outsourcing of Islamabad International Airport by November. In April, he had anticipated completing the privatisation process by June 2024. However, delays arose due to the need for macroeconomic stability and thorough due diligence of interested parties.
He explained that both foreign and local investors want assurance of a solid economic foundation before committing substantial investments. Scrutiny of potential bidders has also contributed to the delay, which the cabinet approved to ensure all necessary evaluations are completed.
Narrow Avoidance of Default Aurangzeb highlighted the steps taken by the government to stabilise the economy, which had been on the verge of default following political instability, severe monsoon floods in 2022, and long-standing economic mismanagement. Inflation surged to 38%, but has since fallen to under 7%, thanks to high interest rates and government restrictions, such as import bans to conserve foreign exchange.
In September, the IMF approved a $7 billion loan for Pakistan, marking the country’s 24th such financial package from the IMF since 1958. Aurangzeb reported improvements in the current account deficit and the rupee’s stabilisation, which has depreciated by 65% against the US dollar since 2020. Additionally, Pakistan repaid over $2 billion to international investors in May and June, supported by macroeconomic gains and reserve growth. The country’s public debt currently stands at 69% of GDP, or roughly $258 billion, according to IMF data.
Tax Reforms and Corruption Pakistan’s ongoing IMF agreement is contingent on privatising state-owned enterprises (SOEs), expanding the tax base, and reforming the power sector. Aurangzeb acknowledged that issues such as leakage, theft, and corruption are common across tax, energy, and SOE reforms, stressing the importance of tackling these challenges.
Contrary to media reports, he dismissed claims that the government was not committed to broadening the tax base. He highlighted a 29% increase in tax revenue last fiscal year and a targeted 40% increase for the current year. In 2022, just 5.2 million people out of Pakistan’s 240 million filed income tax returns.
Aurangzeb emphasised that those not paying taxes must start contributing, as the country’s salaried class and manufacturing sectors have reached a tax “saturation point.” He also mentioned plans to improve taxation of under-taxed sectors such as real estate, retail, and agriculture.
