Pakistan’s Finance Minister Muhammad Aurangzeb has announced the initiation of discussions with the International Monetary Fund (IMF) for a new multi-billion dollar loan agreement aimed at bolstering the country’s economic reform programme. Aurangzeb disclosed that Pakistan intends to request a three-year programme during his visit to Washington for the IMF and World Bank spring meetings.
The upcoming meetings, set to commence on Tuesday, will focus on global economic issues, including climate change mitigation and assistance for heavily indebted nations. The IMF’s updated World Economic Outlook will kick off the discussions, which will bring together prominent figures from finance, development, academia, and civil society.
Pakistan’s recent elections, marked by allegations of rigging, have led to a delicate coalition government led by Prime Minister Shehbaz Sharif. The government faces the challenge of implementing unpopular austerity measures to revive the economy.
Aurangzeb emphasised the necessity of a multi-year IMF loan programme to execute structural reforms effectively. Pakistan’s current $3 billion loan programme, aimed at addressing a balance-of-payments crisis, is nearing its end, with the final tranche expected to be approved soon.
The finance minister noted an improvement in market confidence this fiscal year, attributing it to the country’s economic policies. He expressed Pakistan’s interest in a larger and extended IMF programme, highlighting the need for ongoing discussions.
Despite Pakistan’s close economic ties with both the United States and China, Aurangzeb stressed the importance of maintaining relationships with both countries amidst their trade tensions. He highlighted the significance of the US as Pakistan’s largest trading partner and the substantial investments it provides.
Additionally, he acknowledged China’s role in infrastructure development through projects like the China-Pakistan Economic Corridor (CPEC).
Regarding Pakistan’s structural reforms, Aurangzeb outlined plans for privatising state-owned enterprises (SOEs), starting with Pakistan International Airlines (PIA). Prospective bidders’ interest will be assessed in the coming months, with the goal of completing the privatisation by June. Aurangzeb emphasised the government’s commitment to accelerating privatisation efforts in other sectors in the coming years.
The discussions with the IMF and Pakistan’s reform agenda highlight the country’s efforts to address economic challenges and pave the way for sustainable growth.