Pakistan’s Finance Minister hopeful of new IMF loan agreement in May

ISLAMABAD – Finance Minister Muhammad Aurangzeb is optimistic Pakistan will be able to finalise a critical loan agreement with International Monetary Fund (IMF) next month.

Aurangzeb expressed his views during interaction with world media outlets in Washington, where he is attending the annual meetings of the IMF and the World Bank.

Speaking with wire service, Pakistan’s Finance chief said the incumbent government is seeking an extended loan from IMF to ensure macroeconomic stability and implement necessary structural reforms. He said IMF mission is expected in Islamabad around mid-May. Once the IMF loan is agreed upon, Pakistan plans to request additional financing from the Fund under the Resilience and Sustainability Trust.

Minister further mentioned that South Asian nation is aiming to improve its sovereign rating in the next fiscal year and is in talks with ratings agencies to prepare for a return to international debt markets.

Pakistan's current $3 billion arrangement with the IMF is set to expire in late April, and the government is seeking a larger loan for more stability and reforms.

During IMF and World Bank Spring Meetings, Aurangzeb met with IMF's Managing Director to discuss these matters. The size of the loan program has not been specified, but Pakistan is expected to seek at least $6 billion. The country has managed to accumulate foreign exchange reserves in recent months, aiming for $10 billion by end-June, which is roughly two months of import cover.

The debt situation is also improving, with most bilateral debts, including those with China, being rolled over. Pakistan hopes to return to international capital markets, possibly with a green bond, but more work is needed to achieve this.

During US visit, Aurangzeb also met with his Chinese counterpart in Washington, where he conveyed condolences for a recent terrorist attack and reaffirmed Pakistan's commitment to the safety of Chinese citizens.

The two sides discussed bilateral cooperation, including economic stability efforts, and highlighted the strong bond between the two countries. Pakistan is focusing on reform agendas to strengthen its economy, with the repayment of Chinese loans expected after the second phase of CPEC begins. Pakistan also expressed interest in launching a Panda Bond in the fiscal year 2025-26.