Pakistan seeking yet another bailout: IMF

The IMF mission lauded the improvements made by Pakistan since the first review, with the country showing signs of growth on the back of prudent policy management

• Shajil Kumar
• 21 March, 2024

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By: Shajil Kumar

The International Monetary Fund (IMF) has confirmed that cash-strapped Pakistan is seeking a 24th medium-term bailout package for a permanent push towards longstanding structural reforms.

In its end-of-mission statement on Wednesday (20), the global lender said that Pakistan has “expressed interest in a successor medium-term Fund-supported programme to permanently resolve its fiscal and external sustainability weaknesses,” The Dawn reported.

The IMF mission had visited Islamabad for five days and announced the staff-level agreement on on the second and final review of Pakistan’s stabilisation programme supported by the IMF’s $3 billion standby arrangement approved in July last year.

The statement said subject to the approval of its executive board, the staff-level agreement would enable Pakistan to access about $1.1 billion – $828 million special drawing rights (SDR) – by late April.

The fund also laid bare the broader, though well-known, conditionalities of the next programme on which discussions are expected to start in the coming months, the statement added.

The IMF recognised the “strong programme implementation” by the State Bank of Pakistan and the caretaker government in recent months, as well as the new government’s intentions for ongoing policy and reform efforts for Pakistan’s economic recovery.

“Pakistan’s economic and financial position has improved in the months since the first review, with growth and confidence continuing to recover on the back of prudent policy management,” the IMF mission chief to Pakistan, Nathan Porter, noted.

Another bailout inevitable: Sharif

Pakistan’s Prime Minister Shehbaz Sharif said on Thursday (21) that a long-term IMF bailout was inevitable given the South Asian country’s broken economy.

“We hope to get the $1.1 billion IMF tranche next month,” he told a meeting in Islamabad, adding: “We couldn’t survive without yet another IMF programme.”

With a long-term, two-to-three year IMF programme, he said, the $350 billion economy that has long been under extreme stress with a yawning balance of payment crisis would need deep-rooted structural reforms.

The government has not officially stated the size of the additional funding it is seeking under the long-term bailout.

Pakistan held elections last month, and a shaky coalition government has been tasked with an economic turnaround requiring them to agree to a raft of unpopular IMF belt-tightening measures.

Inflation is soaring at 23 per cent, with water, electricity and gas prices increasing at 36 per cent, in a nation of more than 240 million. (Agencies)