Pakistan Nears Agreement on New IMF Loan
In a bid to stabilize its economy, Pakistan is on the verge of securing a staff-level agreement for a new long-term loan with the International Monetary Fund (IMF) by early July, announced Finance Minister Muhammad Aurangzeb on Tuesday.
Current Economic Situation
With its current $3 billion IMF arrangement set to expire in late April, Pakistan is facing a chronic balance of payment crisis in its $350 billion South Asian economy. The government is seeking a larger, long-term loan to stabilize economic activity and financial markets, enabling the implementation of crucial structural reforms.
24th IMF Bailout for Pakistan
If the agreement is finalized, it will mark the 24th IMF bailout for Pakistan. Aurangzeb expressed optimism about reaching a deal by June or early July following productive discussions during his recent visit to Washington for the IMF and World Bank’s spring meetings.
Future Reforms and Projections
Aurangzeb highlighted key structural reforms in the pipeline, including increasing the government’s tax revenue-to-GDP ratio, privatizing state-owned enterprises to reduce losses, and improving management of the debt-laden energy sector. The finance minister projected a 2.6 percent economic growth rate for fiscal year 2024, with inflation expected to decrease to 24 percent from 29.2 percent in fiscal 2023.