Pakistan to seek $6 billion in new IMF loan programme

ISLAMABAD: Pakistan plans to seek a new loan of at least $6 billion from the International Monetary Fund (IMF) to help the incoming government repay billions in debt due this year.

According to Bloomberg News citing a Pakistani official, the country will seek to negotiate an Extended Fund Facility (EFF) with the IMF, adding that the talks with the global lender were expected to start in March or April.

Pakistan averted default last summer thanks to a short-term International Monetary Fund bailout, but the program expires next month and a new government will have to negotiate a long-term arrangement to keep the $350 billion economy stable.

Ahead of the bailout, the country had to undertake a slew of measures demanded by the IMF, including revising its budget, a hike in its benchmark interest rate, and increases in electricity and natural gas prices.

The IMF staff continues a dialogue with authorities on needed longer-term reform efforts, a spokesperson for the fund said, adding that the fund is available, if requested, to support the post-election government through a new arrangement to address Pakistan’s ongoing challenges.

Pakistan’s vulnerable external position means that securing financing from multilateral and bilateral partners will be one of the most urgent issues facing the next government, ratings agency Fitch said.

“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,” it said.