Critical IMF meeting scheduled for April 29 to approve $1.1 billion for Pakistan

The Executive Board of the International Monetary Fund (IMF) is scheduled to meet on April 29 to deliberate on the approval of a $1.1 billion funding tranche for Pakistan.

This amount represents the final installment of a $3 billion stand-by arrangement (SBA) with the IMF that is due to expire this month.

The anticipated funding comes at a critical time for Pakistan’s economy, which has been struggling with a chronic balance of payments crisis.

The country has nearly $24 billion in debt and interest repayments due over the next fiscal year, which is approximately three times more than its central bank’s foreign currency reserves.

Meanwhile, Pakistan’s Finance Minister, Muhammad Aurangzeb, has indicated that the government is seeking a new long-term, larger loan from the IMF. Discussions are underway, with a staff-level agreement expected by early July.

Islamabad is reportedly aiming for a multi-year agreement to promote macroeconomic stability and implement long-overdue structural reforms. However, the finance minister has not disclosed the exact loan size Pakistan is seeking.

If approved, this would mark the 24th IMF bailout for Pakistan. The ongoing negotiations reflect the country’s continued reliance on international financial assistance to navigate its economic challenges.

Pakistan’s economy is projected to grow by 2.6 per cent in the current fiscal year ending in June, according to the finance ministry.

Despite this modest growth, the country continues to face high inflation, which is expected to average around 24 per cent this fiscal year, down from a record high of 38 per cent in May 2023.

As Pakistan navigates these economic hurdles, securing the final tranche of the IMF’s stand-by arrangement and potentially a new loan agreement could provide much-needed relief and lay the groundwork for longer-term stability.