IMF and Pakistan discuss potential $8 billion bailout package

Pakistan is currently engaged in discussions with the International Monetary Fund (IMF) regarding a potential follow-up programme to its existing nine-month, $3 billion Stand-By Arrangement (SBA). IMF chief Kristalina Georgieva highlighted that Pakistan has made progress in completing its current programme and improving its economy, with reserves showing growth.

Georgieva emphasized the need for Pakistan to address crucial issues such as expanding the tax base, enhancing contributions from the wealthier segments of society, improving the direction of public spending, and establishing a more transparent economic environment.

Recently, Pakistan and the IMF reached a staff-level agreement on the second and final review of the $3 billion stand-by arrangement. Upon approval by the IMF's board, approximately $1.1 billion will be disbursed to Pakistan. Discussions are underway for a longer-term bailout package, focusing on policy reforms to manage deficits, boost reserves, and address escalating debt servicing obligations.

Reports suggest that Pakistan is planning to formally request the IMF for a medium-term Extended Fund Facility (EFF) during the upcoming annual spring meetings of the IMF and World Bank. The country aims to secure a bailout package ranging from $6 to $8 billion, potentially augmented through climate finance, citing the adverse impacts of climate degradation on its economy.

In conclusion, Pakistan's engagement with the IMF reflects its commitment to addressing economic challenges and implementing necessary reforms to stabilize its financial situation and promote sustainable growth.