Pakistan has formally requested a bailout of $6 to $8 billion from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF).
The country has applied for financial aid under two categories: the EFF and additional climate financing. The IMF has reportedly approved an $8 billion loan under the EFF.
Islamabad is waiting for the disbursement of $1.1 billion under a stand-by arrangement that lasts until March 31, 2024. Finance Minister Muhammad Aurangzeb, in discussions with Reuters, expressed hope to finalize a new IMF loan in May. He recently met with IMF Managing Director Kristalina Georgieva at the IMF and World Bank Spring Meetings.
While Aurangzeb did not specify the desired amount, expectations point to at least $6 billion. He noted that Pakistan would also seek further funding under the IMF’s Resilience and Sustainability Trust following the loan agreement.
Aurangzeb remains optimistic about the debt situation, mentioning ongoing rollovers of bilateral debts, including those with China. He anticipates no significant issues managing the annual $25 billion debt repayment for this and the next fiscal year.
Pakistan aims to re-enter international capital markets, potentially through a green bond, though more groundwork is required for an improved sovereign rating, which is expected next fiscal year.
The nation has seen a recent boost in foreign exchange reserves, which are projected to reach $10 billion by the end of June, sufficient for two months of imports.
. This move aims to stabilize the nation's economy, manage debt, and prepare for a return to international debt markets.){kind=link}