Pakistan’s newly appointed PM directs authorities to expedite negotiations with the IMF

Pakistan’s recently appointed Prime Minister, Shehbaz Sharif, has instructed authorities to accelerate negotiations with the International Monetary Fund (IMF) as the country’s existing $3 billion bailout program nears its conclusion in April.

As per Bloomberg, Sharif’s directive to hasten talks for a new loan comes amidst increasing financial hurdles faced by Pakistan, including substantial external debt obligations and the immediate need for financial assistance.

“Sharif’s return as Prime Minister Increases Pakistan’s chances of securing a new IMF aid package,” Bloomberg Economics noted, expressing optimism regarding Sharif’s leadership and his government’s history of implementing reforms.

The urgency to secure fresh funds arises from Pakistan’s impending external debt payments, which total $25 billion in the upcoming fiscal year, posing a strain on the nation’s foreign exchange reserves.

While Pakistan had initially intended to request a new loan of at least $6 billion from the IMF, the final decision on the loan amount remains pending.

Sharif’s administration is eager to obtain financial aid to navigate the country through its fiscal challenges and enact necessary reforms aligned with IMF objectives.

Aisha Ghaus Pasha, a former junior finance minister and economist, emphasized that obtaining aid would grant the country essential fiscal leeway to undertake vital reforms.

Pasha stressed the inevitability of stringent reforms as part of any IMF program, highlighting Pakistan’s need to demonstrate a firm commitment to fiscal prudence and economic stability during negotiations.

Sharif has yet to nominate a new finance minister to spearhead the IMF negotiations.

Muhammad Aurangzeb, President of Habib Bank Ltd and a potential candidate for the finance minister role, participated in a recent meeting chaired by Sharif to discuss the IMF talks, indicating ongoing deliberations within the government regarding key appointments.

Securing a new IMF aid package is not only critical for Pakistan’s economic stability but also for maintaining backing from creditor nations like Saudi Arabia and the United Arab Emirates.

Furthermore, a successful negotiation with the IMF could bolster investor confidence in Pakistan’s dollar bonds, potentially stabilizing financial markets and fostering economic growth.