Pakistan is eagerly anticipating the visit of an International Monetary Fund (IMF) mission this month to discuss the possibility of a new programme. This comes as Islamabad gears up to kickstart its annual budget-making process for the upcoming financial year. The previous $3 billion short-term programme, which Pakistan successfully completed last month, played a vital role in preventing a sovereign default. However, Prime Minister Shehbaz Sharif’s government emphasizes the necessity of a fresh, more extended programme to lay the groundwork for economic stability and growth.
The IMF has confirmed the upcoming visit of a mission to Pakistan in May to engage in discussions regarding the Fiscal Year 2025 budget, proposed policies, and essential reforms under a potential new programme aimed at benefiting the entire population of Pakistan. While specific details such as the visit dates and the size or duration of the programme have not been disclosed, the IMF emphasized the importance of accelerating reforms. The IMF statement highlighted that the focus should be on the quality of reforms rather than just the size of the program, aligning them with the country’s reform agenda and addressing its balance of payments requirements.
Pakistan narrowly escaped default last summer, and its $350 billion economy has shown signs of stabilization following the successful conclusion of the previous IMF programme. Inflation rates have decreased significantly, dropping to approximately 17% in April from a peak of 38% in May of the previous year. Despite these positive developments, Pakistan continues to grapple with a substantial fiscal deficit. While the country has managed to rein in its external account deficit through strict import controls, this approach has resulted in sluggish economic growth. The growth rate is projected to be around 2% this year, a significant improvement from the negative growth experienced in the previous year.
Finance Minister Muhammad Aurangzeb has expressed optimism regarding Pakistan’s chances of reaching an agreement on a new IMF loan during the month of May. Pakistan is likely to request a loan of at least $6 billion from the IMF, with additional financing anticipated from the Fund under the Resilience and Sustainability Trust. This collaboration with the IMF is viewed as a crucial step in Pakistan’s quest for economic stability and resilience in the face of ongoing challenges.
Through proactive engagement with the IMF and a commitment to implementing necessary reforms, Pakistan aims to strengthen its economic foundation and pave the way for sustainable growth and prosperity for its citizens. The upcoming discussions with the IMF mission hold significant importance in shaping Pakistan’s economic trajectory and charting a course towards a more stable and resilient future.