Pakistan Seeks New Multi-Billion Dollar IMF Loan Agreement

Pakistan will be seeking a three year multi-billion dollar loan agreement with the International Monetary Fund (IMF) to support its economic reform programme, says Finance Minister Mohammad Aurangzeb. A report in the Pakistani daily Dawn said Aurangzeb is now in Washington DC for discussions with the IMF and the World Bank.

Dawn quoted Aurangzeb as saying “I do think we will at least be requesting for a three-year multi-billion dollar loan agreement because that’s what we need to execute the structural reform agenda. By the time we get to the second or third week of May, we’ll start getting into the contours of that discussion.”

Pakistan is nearing the end of a nine-month $3 billion loan programme with the IMF designed to tackle a balance of payments crisis, which brought it to the brink of default last year. With the final $1.1 billion tranche of that deal likely to be approved this month, Pakistan has begun negotiations for a new multi-year IMF reform programme.”

“The market confidence, the market sentiment is in much better shape this fiscal year,” he said. “It’s really for that purpose we have initiated discussions with the Fund to get into a larger and an extended programme.”

An IMF spokesman said “The new government has expressed interest in a new programme and we are ready to engage in initial discussions.”

A part of the IMF programme, Pakistan is required to sell off some poorly functioning state-owned enterprises, such as Pakistan International Airlines. If that privatization process goes off well, it could open the doors to selling off other government owned entities.

Aurangzeb says “Our desire is to go through with that privatization and take it through to the finishing line by the end of June. We are creating an entire pipeline. Over the next couple of years we really want to accelerate that.”