IMF, Pakistan make significant progress on new loan agreement

ISLAMABAD: An International Monetary Fund (IMF) mission and Pakistan have made significant progress towards reaching a staff-level agreement for an extended fund facility, the global lender said,  however, its mission returned to Washington without handing over a new bailout package.

The IMF has opened discussions with Pakistan on a new loan programme after Islamabad last month completed a short-term $3 billion programme, which helped stave off a sovereign debt default.

An IMF team, led by mission chief Nathan Porter, concluded discussions with the authorities on Thursday after arriving in Pakistan on May 13, the lender said in a statement.

“Building on the economic stabilization achieved through the successful completion of the 2023 Stand-by Arrangement, the IMF and the Pakistani authorities made significant progress toward reaching a Staff Level Agreement (SLA) on a comprehensive economic policy and reform program that can be supported under an Extended Fund Facility (EFF),” said Nathan Porter after the end of the visit.

“The mission and the authorities will continue policy discussions virtually over the coming days aiming to finalise discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan’s bilateral and multilateral partners,” Porter added.

Pakistan is likely to seek at least $6 billion under the new programme and request additional financing from the IMF under the Resilience and Sustainability Trust. Ahead of the discussions, the IMF had warned that downside risks for the Pakistani economy remained exceptionally high.

The IMF delegation stayed in Pakistan for two weeks and met with key stakeholders. The IMF team also held a meeting with the US ambassador to Pakistan Donald Blome at the residence of the IMF Resident Representative Esther Perez.