Pakistan Seeks $6-8 Billion Bailout Package from IMF, Requests Review Mission for Details

The high-level Pakistani delegation, led by Finance Minister Muhammad Aurangzeb, is currently in Washington for the annual spring meetings of the IMF and World Bank. Pakistan has formally requested a bailout package from the IMF in the range of $6 to $8 billion, with the possibility of additional funding through climate financing.

The country is also seeking to have an IMF review mission dispatched next month to finalize the details of the bailout package, which would be for a three-year period under the Extended Fund Facility. The exact size and timeframe of the package will be determined after consensus is reached on the major aspects of the program in May 2024.

Despite Pakistani authorities painting a positive picture of the economy, the IMF’s latest Regional Economic Outlook highlighted the country’s deteriorating external buffers due to ongoing debt service obligations. Inflationary pressures persist, and the IMF recommended that monetary policy remain tight and data-dependent.

Finance Minister Aurangzeb expressed optimism about Pakistan’s economic potential, stating that with full implementation of key reforms, the economy could grow to $3 trillion by 2047. The current $3 billion IMF arrangement is set to expire in late April, and the government is seeking a larger and longer loan to ensure macroeconomic stability and implement necessary structural reforms.

The IMF has stressed the importance of prioritizing reforms to revitalize the Pakistani economy over the size of the loan package being negotiated. The outcome of the discussions between Pakistan and the IMF will have significant implications for the country’s economic future.