Pakistan & IMF Near Loan Deal: USD 7 Billion Package Update

Islamabad, Mar 21 (PTI) Pakistan hopes to receive positive news from the International Monetary Fund (IMF) as the global lender moves towards the conclusion of talks in securing the next tranche of the USD 7 billion loan package, Finance Minister Muhammad Aurangzeb said on Friday.

While talking to the media, the minister reassured that Pakistan was on track to meet the IMF's economic discipline targets after an IMF delegation visited the cash-strapped country this month and met various officials.

Aurangzeb emphasised Pakistan's commitment to fiscal discipline and highlighted the government's adherence to the financial framework agreed upon with the IMF.

The talks are focused on securing the next tranche of USD 1 billion out of a USD 7 billion loan package agreed last year.

Additionally, Aurangzeb addressed climate change challenges, stressing the urgent need for structured financing to combat environmental risks.

According to reports, Pakistan was also in talks with the fund to secure an additional USD 1.5 billion to combat climate challenges, including the rapid melting of glaciers and economic disruptions caused by environmental changes.

The optimism shown by the minister stems from the remarks by IMF Mission Chief to Pakistan, Nathan Porter, who after visiting Pakistan last week confirmed that significant progress had been made towards reaching a staff-level agreement (SLA) regarding the first review of the loan programme.

The Express Tribune quoted central bank governor Jameel Ahmad as saying on Thursday that there was no hurdle from the State Bank of Pakistan (SBP)'s side in reaching a staff-level agreement with the IMF and that any outstanding issues might be related to the federal government.

While talking to the media after a meeting of the Public Accounts Committee, the governor hoped the staff-level agreement would be reached very soon with the IMF.

Pakistan and the IMF held talks from March 3 to 14, but both sides could not reach a staff-level agreement due to delays in finalising the Memorandum of Economic and Financial Policies (MEFP).

After the mission returned to Washington, the Ministry of Finance held at least two virtual sessions with the IMF in the presence of other stakeholders.

The IMF and Pakistan are in the process of finalising the MEFP in the areas of trade and taxes, along with fiscal and circular debt numbers. The federal authorities remain hopeful that the agreement will be reached soon.

Pakistan is heavily dependent on the IMF to meet the balance of payment challenge and it is feared that without support by the fund, the country may default on its external obligations.