Saturday May 18, 2024

IMF mission chief to lead bailout talks with Pakistan next week, confirms official

Fund's mission chief to lead talks to mull "next phase of engagement" as government seeks to secure $6-8 billion bailout package

By Ashraf Malkham
May 12, 2024
IMFs Resident Representative for Pakistan Esther Perez Ruiz. — Reporter
IMF's Resident Representative for Pakistan Esther Perez Ruiz. — Reporter

ISLAMABAD: A senior official of the International Monetary Fund's (IMF) Sunday confirmed that a team of the Washington-based lender will reach Pakistan next week to hold talks with Islamabad over bailout package.

As per IMF's Resident Representative for Pakistan Esther Perez Ruiz, a team led by Fund's Mission Chief to Pakistan Nathan Porter will meet Pakistani authorities "to discuss the next phase of engagement". 

She further stressed that the aim of the negotiations is to "lay the foundation for better governance and stronger, more inclusive, and resilient economic growth that will benefit all Pakistanis".

Her remarks come after an IMF support team reached Pakistan to hold talks regarding the South Asian nation's request for a fresh bailout package under the Extended Fund Facility (EFF) on Friday.

Sources told Geo News that the team, during their stay which is expected to exceed 10 days, will receive data from different departments and will also discuss the upcoming budget for the fiscal year 2025 (FY2025), with the Ministry of Finance officials.

It is to be noted that Islamabad has ought a next bailout package in the range of $6 to $8 billion for the three-year period under the EEF with the possibility of augmentation through climate financing, The News reported last month.

The Washington-based lender, in its report issued earlier this month, had expressed doubts over Pakistan's ability to successfully repay the Fund.

"Pakistan's capacity to repay the fund is subject to significant risks and remains critically dependent on policy implementation and timely external financing," the IMF said in its report.

It further stressed that: "Exceptionally high risks — notably from delayed adoption of reforms, high public debt and gross financing needs, low gross reserves and the SBP’s net FX derivative position, a decline in inflows, and sociopolitical factors — could jeopardise policy implementation and erode repayment capacity and debt sustainability."

The report highlighted that the country needed gross financing worth $123 billion during the next five years, adding that Pakistan was expected to seek $21 billion in fiscal year 2024-25 and $23 billion in 2025-26.

As per the IMF, Islamabad is expected to seek $22 billion in 2026-27, $29 billion in 2027-28 and $28 billion in 2028-29.