IMF Considers $1.1 Billion Funding for Pakistan Amid Economic Challenges

imf considers $1.1 billion funding for pakistan amid economic challenges

The board of the International Monetary Fund (IMF) plans to convene on April 29 to discuss granting $1.1 billion in financial assistance to Pakistan. This announcement came on Wednesday from the IMF. The funding is part of a $3 billion deal, the second and final portion, that Pakistan secured last summer to avoid a national financial crisis. This arrangement, known as the Stand-By Arrangement (SBA), is set to expire this month.

Pakistan, situated in South Asia, aims to secure a more substantial, long-term loan from the IMF. Muhammad Aurangzeb, Pakistan’s Finance Minister, hinted that Islamabad could finalize an agreement with the IMF staff for this new program by early July.

The Pakistani government’s objective is to obtain a loan lasting at least three years to stabilize the country’s economy and implement significant but challenging structural reforms. However, Aurangzeb has not revealed the exact size of the loan they are seeking.

Even though Pakistan has not yet formally requested the loan, discussions are already in progress between the IMF and the Pakistani government. If successful, this would mark Pakistan’s 24th bailout from the IMF.

Pakistan, with an economy valued at $350 billion, faces a persistent balance of payment crisis. It is burdened with nearly $24 billion in debt and interest payments in the upcoming fiscal year, an amount three times larger than its central bank’s foreign currency reserves.

According to Pakistan’s finance ministry, the economy is forecasted to grow by 2.6% in the current fiscal year, ending in June. Average inflation is expected to reach 24%, a slight improvement from the previous fiscal year’s 29.2%. Inflation reached a peak of 38% last May.