Pakistan and IMF in Talks for New Bailout Package

Pakistan is currently engaged in discussions with the International Monetary Fund (IMF) to secure a new bailout package while simultaneously focusing on planning the budget for the upcoming fiscal year 2024-25. The federal government, in collaboration with the Pakistan Peoples Party (PPP), is actively deliberating over the budget, with a tentative presentation date set for June 7.

The recent meeting, attended by key figures from both the PPP and the government, also addressed the current political landscape in the country. The Pakistan Muslim League-Nawaz (PML-N) government, under the leadership of PM Shehbaz, will require support from the PPP to pass the budget due to a lack of sufficient numbers in the National Assembly.

Following the alliance formed after the recent elections between the PPP and PML-N, the PPP supported Shehbaz's election as the country's premier in exchange for various constitutional positions. The upcoming budget holds significant importance as Pakistan has formally requested a bailout package from the IMF in the range of $6 to $8 billion under the Extended Fund Facility (EFF).

An IMF team recently visited Islamabad to discuss Pakistan's economic plans and requirements for the EFF. While progress has been made towards reaching a Staff Level Agreement (SLA) on economic policies and reforms, the IMF has tied the bailout package to the approval of the aligned budget.

The government is anticipated to demonstrate its ability to boost revenue through the Federal Bureau of Revenue (FBR) and implement tariff hikes on electricity and gas to meet IMF conditions. The budget for 2024-25 will serve as a critical test for the current regime to showcase its commitment to fulfilling the IMF's stringent requirements.

The ongoing discussions between Pakistan and the IMF for a new bailout package, coupled with the budget planning for the upcoming fiscal year, highlight the country's efforts to stabilize its economy and meet international financial obligations. The collaboration between political parties and the focus on economic reforms underscore the importance of these developments for Pakistan's financial future.