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IMF says Pakistan’s economic reforms more important than size of new bailout package

The International Monetary Fund (IMF) is ready to support Pakistan and the package of reforms is now more important than the size of new programme, the global lender’s Middle East and Central Asia director said on Thursday.

“I think what is important at this stage is to accelerate the reforms, double down on the structure of reforms in order to provide Pakistan with its full potential of growth,” Jihad Azour told a press conference on the sidelines of the IMF 2024 Spring Meetings.

The statement comes as Foreign Minister Muhammad Aurangzeb, who is currently in Washington, initiated discussions with the IMF for a new multibillion-dollar loan agreement to support its economic reform programme.

Pakistan is nearing the end of a nine-month, $3-billion SBA with the IMF designed to tackle a balance-of-payments crisis, which brought it to the brink of default last summer.

With the final $1.1 billion tranche of that deal likely to be approved later this month, Pakistan began negotiations for a new multi-year IMF loan programme worth “billions” of dollars, Finance Minister Muhammad Aurangzeb told AFP in Washington earlier this week.

In a separate interview, the finance minister had said that Pakistan needs two to three years to implement structural reforms prescribed by the IMF.

Pakistan doesn’t need more policy prescriptions as it knows what it needs to keep the economy steady which is implementation of reforms, he had said while speaking at the Atlantic Council think tank in Washington on Tuesday.

“We have known the what and why not for years but for decades. […] It’s time for us to actually start moving the execution of these aspects and why we’re looking for a larger and extended program, so once we get into the execution we will need a two to three-year time period to go through the structural reforms,” said Aurangzeb.

Last week, IMF chief Kristalina Georgieva said Pakistan is in discussions with the global lender on a potential follow-up programme to its nine-month $3 billion SBA, adding that it had important issues to solve.

Georgieva told an event at the Atlantic Council think tank, that Pakistan was successfully completing its existing programme with the IMF and its economy was performing somewhat better, with reserves now being built up.

The News quoting sources had reported that Pakistan decided to make a request for augmenting the Extended Fund Facility (EFF) through climate finance, so there was a possibility for securing $6 to $8 billion size of the upcoming programme.

“We are going to present our argument before the IMF management that Pakistan faced severe consequences of climate degradation and deserved support from the international community and donor agencies,” the publication had quoted sources as saying earlier this month.


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