Pakistan may seek another loan from the International Monetary Fund (IMF) to help its economy, according to caretaker Finance Minister Shamshad Akhtar, a day after the lender agreed to a payment under an existing rescue package.
Pakistan and IMF Relations
“We need to continue working with the IMF because our economy is still fragile,” Dr. Shamshad Akhtar said during a news conference in Islamabad on Thursday.
The remark comes a day after Pakistan achieved a staff-level agreement with the IMF for a $700 million loan under a $3 billion program, highlighting the extent of the country’s economic problems.
Pakistan has approximately $1 billion in dollar-denominated debt that is due next year after the February elections.
Nation’s dollar bonds outperformed the rest of the emerging market sovereign debt on Thursday, thanks to the IMF’s initial clearance.
PSX Performing Outstanding
The country’s bonds have returned more than 50% this year, and the KSE-100 Index, the benchmark equities gauge, has been one of the top performers globally since the IMF rescue agreement in July.
The IMF stated this week that, while Pakistan is experiencing a nascent economic recovery, the country remains vulnerable to considerable external risks.
The country has avoided debt default by securing the current nine-month IMF program.
According to the finance minister, the caretaker administration would try to communicate to the IMF about the next program because the country will require the lender’s assistance to consolidate macroeconomic stability.
Elections 2024
Because Pakistan holds elections in February, any negotiations regarding an IMF loan will be difficult to schedule.
According to the IMF, the country’s external finance needs would average $30 billion per year between fiscal 2025 and 2028.
This means that whoever is in power after the February elections will have to negotiate a new longer-term contract with the IMF.
To read our blog on “IMF and Pakistan reaches on 2nd tranche agreement of $700 mn,” click here.
