PM Shehbaz, IMF chief discuss new bailout package on WEF sidelines

PM Shehbaz, IMF chief discuss new bailout package on WEF sidelines

Prime Minister Shahbaz Sharif (right) meets International Monetary Fund (IMF) Managing Director Kristalina Georgieva in Riyadh on April 28, 2024. — Prime Minister’s Office   
  • PM Shehbaz meets IMF chief Georgieva on sidelines of WEF moot.
  • PM thanks IMF chief for her support to Pakistan
  • IMF chief appreciates premier for timely securing SBA last year.

Prime Minister Shehbaz Sharif on Sunday discussed new bailout package with the International Monetary Fund (IMF) Managing Director Kristalina Georgieva on the sidelines of the World Economic Forum Special Meeting in Riyadh. 

In his first meeting with the IMF chief since his re-election, PM Shehbaz reiterated his government’s commitment to put Pakistan’s economy back on track, according to a statement issued by the PM Office.

Pakistan is seeking a new long-term Extended Fund Facility (EFF) after a current $3 billion Stand-By Arrangement (SBA) expires this month.

“Both sides also discussed Pakistan entering into another IMF program to ensure that the gains made in the past year were consolidated and its economic growth trajectory remained positive,” the statement added.

PM Shehbaz thanked IMF chief Georgieva for her support to Pakistan in securing the $3 billion SBA from the international lender last year that was now nearing its completion.

The development came a day before the expected meeting of the IMF Executive Board to decide on the final tranche of $1.1 billion under the $3 billion short-term loan programme.

IMF chief Georgieva appreciated the leadership of PM Shehbaz for timely securing SBA last year, as per the statement.

During the meeting, the prime minister said that he had directed his financial team, led by Finance Minister Muhammad Aurangzeb, to carry out structural reforms, ensure strict fiscal discipline and pursue prudent policies that would ensure macro-economic stability and sustained economic growth.

The IMF MD shared her institution’s perspective on the ongoing programme with the premier, including the review process.

According to The News, Pakistan country made formal request to the IMF for seeking next bailout package ranging between $6 to $8 billion under the EFF with possibility of augmentation through climate financing.

However, the exact size and time frame will only be determined after evolving consensus on the major contours of the next programme in May 2024.

Pakistan has shown its interest and also made a request to dispatch the IMF review mission in May 2024 to firm up details of the next bailout package of three years period under EFF programme.

Finance Minister has said Islamabad could secure a staff-level agreement on the new programme by early July.

Islamabad says it is seeking a loan over at least three years to help achieve macroeconomic stability and execute long-overdue and painful structural reforms, though Aurangzeb has declined to detail what seize of programme the country seeks.

If secured, it would be Pakistan’s 24th IMF bailout.

The $350 billion economy faces a chronic balance of payments crisis, with nearly $24 billion to repay in debt and interest over the next fiscal year — three-time more than its central bank’s foreign currency reserves.

Ministry of Finance expects the economy to grow by 2.6% in the fiscal year ending in June, while average inflation for the year is projected to stand at 24%, down from 29.2% the previous fiscal year.

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