According to a Pakistani official cited by Bloomberg News on Thursday, Pakistan is contemplating the pursuit of a fresh loan amounting to no less than $6 billion from the International Monetary Fund (IMF) to facilitate the incoming government in meeting its obligations to repay substantial debts scheduled for this year.
Reportedly, the country intends to engage in discussions with the IMF to negotiate an Extended Fund Facility, with anticipated talks slated to commence in March or April.
Last summer, Pakistan narrowly evaded default owing to a short-term bailout from the International Monetary Fund. However, as the current program is set to expire next month, it becomes imperative for the new government to initiate negotiations for a long-term arrangement to ensure stability for the $350 billion economy.
Preceding the bailout, Pakistan had to implement a series of measures mandated by the IMF, including budget revisions, an elevation in its benchmark interest rate, and adjustments to electricity and natural gas tariffs.
A spokesperson for the IMF affirmed that ongoing dialogues persist between the fund and Pakistani authorities concerning necessary reforms for the long term. Furthermore, the IMF stands prepared to offer assistance, if solicited, to bolster the post-election government through a new agreement aimed at addressing Pakistan's enduring challenges.
At the time of reporting, Pakistan's interim finance minister had not provided a response to a Reuters inquiry regarding the Bloomberg article.
Fitch, a rating agency, highlighted on Monday that Pakistan's precarious external position underscores the urgency of securing financing from both multilateral and bilateral partners as one of the foremost priorities for the upcoming government.
Fitch underscored, "A new deal is key to the country's credit profile, and we assume one will be achieved within a few months, but an extended negotiation or failure to secure it would increase external liquidity stress and raise the probability of default."
