Pakistan will Apply for a New $6 Billion IMF Credit Program: Report
Image Source: India Today
According to a Pakistani official quoted in a Bloomberg News story on Thursday, Pakistan intends to approach the International Monetary Fund (IMF) for a fresh loan of at least $6 billion to assist the incoming administration in repaying billions of dollars in debt that is due this year.
According to the report, the nation will attempt to negotiate an Extended Fund Facility with the IMF, and it was anticipated that discussions with the international lender would begin in March or April.
Thanks to a short-term IMF bailout, Pakistan avoided defaulting last summer. However, the plan expires next month, and the next administration will need to negotiate a long-term deal to maintain the $350 billion economy stable.
The IMF forced the South Asian country to enact a number of reforms prior to the rescue, including raising its benchmark interest rate, changing its budget, and raising the cost of natural gas and electricity.
A fund spokeswoman stated that the IMF staff is still in communication with authorities regarding the longer-term reform initiatives that are required. The fund is also willing to assist the post-election government in addressing Pakistan’s ongoing issues by creating a new arrangement, should that be desired.
When Reuters asked Pakistan’s caretaker finance minister for comment on the Bloomberg article, she did not answer right away.
According to ratings firm Fitch, one of the top priorities for the incoming government would be obtaining funding from bilateral and multilateral partners due to Pakistan’s precarious external position, which was stated on Monday.
“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,” said the report.
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