Pakistan is actively pursuing negotiations with the International Monetary Fund (IMF) for a new loan agreement, aiming to finalise the terms by May, according to Finance Minister Muhammad Aurangzeb who spoke to Reuters. The current $3 billion IMF arrangement is set to expire in late April, prompting the government to seek a larger and longer-term loan to reinforce macroeconomic stability and facilitate essential structural reforms.
Aurangzeb revealed that discussions with the IMF have commenced, with expectations of the IMF mission visiting Islamabad in mid-May to commence formal deliberations. The minister, who recently met with the IMF’s Managing Director Kristalina Georgieva during the spring meetings organised by the IMF and World Bank in Washington, emphasised the importance of securing a multi-billion dollar loan agreement, likely spanning three years, to bolster Pakistan’s economic reform agenda.
Addressing concerns about rapid rupee devaluation, Aurangzeb reassured that a new IMF deal would not trigger such consequences. Instead, the focus remains on implementing reforms to revitalise Pakistan’s economy, as emphasised by IMF’s Middle East and Central Asia Director Jihad Azour.
While Aurangzeb refrained from disclosing the desired size of the loan package, he indicated Pakistan’s intention to seek additional financing from the IMF under the Resilience and Sustainability Trust once the loan agreement is finalised. He also highlighted positive developments in foreign exchange reserves and the debt situation, projecting a healthy outlook.
Pakistan aims to re-enter international capital markets, potentially through a green bond issuance. However, Aurangzeb acknowledged the need to address certain criteria, including sovereign ratings, before tapping into these markets. Talks with ratings agencies have commenced, with hopes of an improvement in Pakistan’s sovereign rating in the upcoming fiscal year, paving the way for international capital market access, likely in the fiscal year 2025/2026.
