Pakistan is making progress in its negotiations to secure a new $7 billion deal with the International Monetary Fund (IMF), with an agreement expected to be finalized in September, according to Finance Minister Muhammad Aurangzeb. As negotiations progress, the government remains optimistic about finalizing the IMF deal by September. It should be noted that this will be a 37-month-long loan program and the government and the IMF agreed to it in July this year.
However, the approval of the loan is contingent upon the endorsement by the IMF’s Executive Board, which requires “timely confirmation of necessary financing assurances from Pakistan’s development and bilateral partners.” To address this requirement, Pakistan is actively engaging in discussions with friendly nations, including the United Arab Emirates (UAE), China, and Saudi Arabia, to secure financing for its substantial energy needs. During his visit to China, the finance minister emphasized that Pakistan is on a mission to “seek energy debt reprofiling” in order to secure the IMF deal, underscoring the necessity of support from these allied countries.
It is worth noting that in the past, Pakistan successfully rolled over its external debts with the support of its long-standing allies, which enabled the country to secure previous IMF deals. The Finance Minister, Muhammad Aurangzeb, stated, “We are making good progress with IMF for Board approval in September.” Thus, Pakistan is working diligently to secure an IMF deal that could provide a much-needed $7 billion boost to its economy.
It is pertinent to mention here that the central bank’s chief has assessed that Pakistan is likely to secure rollovers of up to $16.3 billion in the fiscal year ending in June 2025. This would allow Pakistan to cover nearly half of its $26.2 billion external financing requirements. Additionally, the IMF, in its July 2024 World Economic Outlook, predicted that Pakistan’s GDP is expected to grow by 2% in 2024. This forecast reflects a positive growth trend, signaling an improvement in Pakistan’s economic outlook.
