ISLAMABAD: Pakistan is gearing up to request a fresh loan of at least $6 billion from the International Monetary Fund (IMF) to assist the incoming government in repaying billions in debt due this year, Bloomberg News reported on Thursday, citing a Pakistani official.
The country intends to pursue negotiations for an Extended Fund Facility with the IMF, with talks expected to commence in March or April, the report noted.
While a default was narrowly avoided last summer with a short-term IMF bailout, the program is set to expire in April, necessitating a long-term arrangement to maintain economic stability under the new government.
Pakistan had previously implemented a series of measures at the behest of the IMF, including budget revisions, an increase in the benchmark interest rate, and adjustments to electricity and natural gas prices.
Both the IMF and the caretaker finance minister have yet to respond to Reuters’ request for comment on the Bloomberg report. Fitch, a ratings agency, highlighted the country’s precarious external position, emphasizing that securing financing from multilateral and bilateral partners will be among the most pressing issues for the next government.
“A new agreement is crucial to the country’s credit profile, and we anticipate one being reached within a few months. However, prolonged negotiations or failure to secure such an agreement could exacerbate external liquidity pressures and heighten the risk of default,” Fitch stated.
