Pakistan has been asked by the International Monetary Fund (IMF) to arrange for $8 billion in fresh loans to back external debt repayments for the next seven months. This demand by the IMF has further reduced the chances of a revival of the $6.5 billion bailout package.
The government sources say that the IMF has not received approval for the upcoming budget for the fiscal year 2023-24. This minimises the prospects of early completion of the pending 9th review of the Extended Fund Facility (EFF).
The IMF has now raised the demand for additional financing from $6 billion to $8 billion. This has been done to ensure the debt repayments that are due between May and December 2023. The $8 billion need has been worked out by considering all projected inflows and outflows for this period.
Pakistan has rejected the demand for additional financing, stating that the Fund’s current programme will end in June 2023 and should not put conditions beyond the programme period.
In February of this year, the IMF had asked Pakistan to arrange $6 billion in fresh loans, excluding rollovers and refinancing, to meet debt repayments until June 2023. Due to a delay in arranging these funds, the 9th programme review worth $1.2 billion remains incomplete.
The finance minister, Ishaq Dar, informed the executive director of the IMF that Pakistan had met all the prior actions. Saudi Arabia has promised to give $2 billion, and the United Arab Emirates has committed $1 billion in fresh loans.
The finance minister further stated that the remaining $3 billion can only be arranged once the IMF announces staff-level agreement and the board approves the ninth review along with the $1.2 billion tranche.
According to IMF spokesperson Julie Kozack, Pakistan needs “significant additional financing” to successfully complete the ninth review. She said the economy was facing stagflation, had very large financing needs and had also been affected by a series of shocks, including