Pakistan seeks larger IMF loan for economic stability

Pakistan is in talks with the International Monetary Fund (IMF) to secure a new loan agreement, aiming for a longer and larger loan to enhance macroeconomic stability and implement crucial structural reforms. The current $3 billion arrangement with the IMF is set to expire in late April, prompting the government to seek a more substantial financial package. Finance Minister Muhammad Aurangzeb revealed that discussions with the IMF are underway, with expectations for the IMF mission to visit Islamabad in mid-May to finalize the loan details.

Aurangzeb mentioned that Pakistan is likely to request at least $6 billion from the IMF, in addition to seeking further financing from the Resilience and Sustainability Trust. Despite facing significant debt repayment obligations, Pakistan has managed to boost its foreign exchange reserves, aiming to reach $10 billion by the end of June, equivalent to approximately two months of import cover.

Furthermore, Pakistan is considering a return to international capital markets, potentially through issuing a green bond. However, the country acknowledges the need to improve its sovereign rating before entering the global market. Talks with ratings agencies have commenced, with hopes of achieving a rating upgrade in the upcoming fiscal year. The government anticipates a potential international capital markets issuance in the 2025/2026 fiscal year.