Despite reaching a staff-level agreement with the International Monetary Fund (IMF) for a $7 billion Extended Fund Facility (EFF) bailout package, Pakistan has yet to secure confirmation of an external financing gap estimated to be between $3 to $5 billion. This delay has hindered the formal signing of a Letter of Intent (LoI) required for the IMF executive board’s approval.
The issue of external financing has emerged as a major obstacle in obtaining the IMF bailout package. Pakistan is currently not included in the list of countries for which the IMF board is scheduled to consider approval of loans until August 28, 2024.
When contacted for comment, Federal Minister for Finance and Revenues Mohammad Aurangzeb expressed optimism about progress towards obtaining board approval in September.
It was initially anticipated that Pakistan’s request for approval would be considered by the IMF’s executive board within four to six weeks after the staff level agreement was reached on July 12, 2024. However, progress has been slower than expected. The IMF’s approval is subject to timely confirmation of necessary financing assurances from Pakistan’s development and bilateral partners.
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Furthermore, Pakistan faces significant external debt repayments amounting to $26.2 billion during the current fiscal year 2024-25, with plans for a rollover of $12.3 billion in deposits. While the government aimed for a three-year rollover, commitments from countries such as Saudi Arabia, China, and the UAE have only been secured for a one-year period.
