WASHINGTON: Pakistan has initiated discussions with the International Monetary Fund (IMF) over a new multi-billion dollar loan agreement to support its economic reform programme, its finance minister told AFP on Monday.
Pakistan is nearing the end of a nine-month, $3-billion Stand-By Arrangement with the IMF designed to tackle a balance-of-payments crisis, which brought it to the brink of default last summer.
With the final $1.1 billion tranche of that deal likely to be approved later this month, Pakistan has begun negotiations for a new multi-year IMF loan programme worth “billions” of dollars, Finance Minister Muhammad Aurangzeb said during an interview in Washington.
“The market confidence, market sentiment is in much, much better shape this fiscal year,” said Aurangzeb, a former banker who took up his post last month. “It’s really for that purpose that, during the course of this week, we have initiated the discussion with the Fund to get into a larger and an extended programme,” he added.
An IMF spokesperson told AFP that the Fund is “currently focused on the completion of the current SBA,” referring to the ongoing nine-month programme scheduled for completion shortly.
“The new government has expressed interest in a new programme, and Fund staff stands ready to engage in initial discussions on a successor programme,” the spokesperson added.
“I do think that we will at least be requesting for a three-year programme,” Aurangzeb said. “Because that’s what we need, as I see it, to help execute the structural reform agenda.”
“By the time we get to the second or third week of May, I do think we’ll start getting into the contours of that discussion,” he added.
“[The] US is our largest trading partner, and it has always supported us, always helped us in terms of the investments,” he said. “On the other side, a lot of investment, especially in infrastructure, came through CPEC,” he said.
Aurangzeb said there was a “very good opportunity” for Pakistan to play a similar role in the trade war as countries like Vietnam, which has been able to dramatically boost its exports to the US following the imposition of tariffs on some Chinese goods.
“We have already a few examples of that already working,” he said. “But what we need to do is to really scale it up.”
The first SOE on the list is Pakistan International Airlines (PIA), the country’s flag carrier. “We will get to know in the next month or so with respect to interest from prospective bidders,” Aurangzeb said.
“Our desire is to go through with that privatisation and take it through the finishing line by the end of June,” he added. “If the PIA privatisation goes well for the government, other companies could soon follow. We’re creating an entire pipeline,” he said. “Over the next couple of years we want to really accelerate that.”