Pakistan to seek fresh IMF bailout package with focus on climate finance

Pakistan is gearing up to address its economic woes by formally requesting a medium-term Extended Fund Facility (EFF) from the International Monetary Fund (IMF) during the upcoming Annual Spring Meetings of Bretton Woods Institutions next week, reports The News International.

Led by Finance Minister Muhammad Aurangzeb, Pakistan’s delegation will request a medium-term EFF with a potential boost through climate finance, scheduled for discussions from April 15 to 20 in Washington, D.C.

In mid-March, IMF’s global team reached a staff-level agreement with the Pakistani authorities on the second and final review of Pakistan’s stabilisation programme supported by the global lender’s USD 3 billion standby arrangement approved in July last year.

Pakistan has decided to request boosting of the EFF through climate finance, as there was a possibility for securing funding of $6 billion to $8 billion size of the upcoming programme, according to the sources. 

The IMF’s review mission, expected to commence talks in early May 2024, will determine the specifics of the bailout package, considering Pakistan’s vulnerability to climate degradation and the need for international support.

Furthermore, Pakistan’s total public debt, projected to rise to Rs 120 trillion over the medium term, remains within the IMF’s sustainability parameters, as indicated in the last review under the Standby Arrangement.

However, the World Bank’s biannual Pakistan Development Outlook report, released earlier this month, painted a grim economic picture, indicating that the country is set to miss almost all major macroeconomic targets, cautioning that over 10 million more people are at risk of descending into poverty.

Although, concerns persist as the World Bank’s latest Pakistan Development Outlook report highlights a grim economic outlook, with sluggish growth rates and soaring inflation, threatening to push over 10 million people into poverty.

(with inputs from PTI)