As economic assessment talks kick off, Pakistan aims for a new IMF loan to bolster its finances

In a significant development, the International Monetary Fund (IMF) mission is set to arrive in Pakistan this Wednesday for a crucial economic assessment. This visit marks a pivotal moment as Islamabad seeks a substantial new loan ranging between $6 to $8 billion. The talks, taking place from March 14 to 18, revolve around the existing USD 3 billion Stand-By Arrangement (SBA) and the prospect of securing additional financial support.

The newly appointed Finance Minister, Muhammad Aurangzeb, has shown readiness to negotiate with the IMF on both the SBA and the potential new loan program. This initiative comes at a time when Pakistan has successfully met the IMF’s targets for the second review of the ongoing SBA, indicating a promising foundation for further discussions.

In addition to revisiting the final instalment of USD 1.1 billion from the SBA, Islamabad aims to propose a new 36-month Extended Fund Facility (EFF) during these negotiations. This proposed fresh loan program is viewed as a critical step toward stabilizing Pakistan’s economic situation.

Officials from the Finance Ministry express optimism about collaborating with the IMF to set economic objectives for the potential loan, emphasizing the importance of aligning with the IMF’s standards and expectations.

The push for a new loan program follows the IMF’s announcement on March 8, readying to dispatch a mission to Islamabad for the second economic review. This move comes after the recent formation of Prime Minister Shehbaz Sharif’s cabinet, highlighting the IMF’s focus on concluding the current Stand-By Program, set to end in April 2024.

Prime Minister Shehbaz Sharif has also voiced his determination to free Pakistan from foreign debt burdens, stating his government’s commitment to move away from reliance on the IMF. Amidst challenges like rising inflation, Sharif’s administration is under pressure to deliver economic relief to the populace, emphasizing efforts to curb inflation as a primary objective.

This series of talks and proposals not only underscores Pakistan’s urgent need for financial support but also highlights the broader challenges faced by the country in stabilizing its economy and providing relief to its citizens