Pakistan requesting multi-billion-dollar loan programme from IMF, says finance minister

Pakistan requesting multi-billion-dollar loan programme from IMF, says finance minister
Source: File Photo

Wahington (Web Desk Agencies): Finance Minister Muhammad Aurangzeb has said Pakistan is requesting a larger and longer multi-billion-dollar loan programme from the International Monetary Fund (IMF).

In an interview with TRT World, he said discussions are underway with the IMF's officials.

The finance minister, meanwhile, ruled out any further significant rupee devaluation.

Speaking at roundtable meeting with Bloomberg team in Washington, he said Pakistan's solid reserves, stable currency, and growing exports support against rupee devaluation.

He said his country is ramping up support for industries, agriculture, and IT to boost national growth above four percent in the coming years.

Earlier, in an interview with British news agency Reuters, the finance minister said that Pakistan hopes to agree the contours of a new IMF loan in May.

He said that Pakistan has kicked off talks with ratings agencies to lay the groundwork for a return to international debt markets.

The country’s current $3 billion arrangement with the fund runs out in late April and the government is seeking a longer and bigger loan to help bring permanence to macroeconomic stability as well as an umbrella under which the country can execute much needed structural reforms, the minister said.

“We expect the IMF mission to be in Islamabad around the middle of May – and that is when some of these contours will start developing,” said Aurangzeb, who met with the Fund’s Managing Director Kristalina Georgieva on Wednesday during the International Monetary Fund and World Bank Spring Meetings, said a release issued by Ministry of Finance here on Friday.

He declined to outline what size programme the government hoped to secure, though Pakistan is expected to seek, opens new tab at least $6 billion. Aurangzeb added that once the IMF loan was agreed, Pakistan would also request additional financing from the Fund under the Resilience and Sustainability Trust.

The struggling South Asian nation had managed to accumulate foreign exchange reserves in recent months and was on track for its war chest to hit $10 billion – or roughly two months import cover – by end-June.

The debt situation also looked more benign, Aurangzeb said.

“The bulk of our bilateral debt – including our China debt – is being rolled over, so in that sense I think we are in good shape and I don’t see a big issue during this fiscal year nor next fiscal year, cause we need to repay roughly $25 billion dollars every fiscal year.”

Pakistan also hopes to come back to international capital markets, possibly with a green bond. However, there was some more work to be done before that happens, said Aurangzeb.

“We have to come back into a certain ratings environment,” he said, having kicked off talks with ratings agencies, adding the government was hoping to get an improvement in its sovereign rating in the next fiscal year.

 “In all likelihood, any international capital markets issuance will likely be in the 2025/2026 fiscal year.”

Separately, talking to President of Asia Infrastructure Investment Bank (AIIB) Jin Liqun in Washington DC, the finance minister identified broadening the tax base, fixing the energy sector, and undertaking state-owned enterprise (SOE) reforms as key priorities of the government.

Muhammad Aurangzeb briefed the AIIB President on Pakistan's positive economic indicators, including improving foreign exchange reserves, a stable currency, declining inflation rates, and a surging stock market.

He reaffirmed Pakistan's commitment to continue working closely with AIIB on the infrastructure development of the country.

Meanwhile, the finance minister met with Managing Director of International Finance Corporation Makhtar Diop. He expressed gratitude to IFC for its support in the outsourcing of the Islamabad airport, which will be followed by similar initiatives in Lahore and Karachi.

He noted with satisfaction the uptick in IFC activities in the country and requested the corporation's support in assisting the government in shifting its Public Sector Development Program (PSDP) to PPP mode.

The finance minister also with Deputy Under Secretary for International Finance at the US Department of Treasury Brent Neiman and briefed him on Pakistan's positive economic indicators in the wake of the Stand-By Arrangement (SBA) signed with the IMF.