Pakistan not included in IMF agenda on August 28, 2024 despite of SLA, raising questions about future support.
Pakistan is facing challenges in confirming an external financing gap of $3 to $5 billion, even five weeks after reaching a staff-level agreement on a new bailout package under the Extended Fund Facility (EFF). This delay has hindered Pakistan’s ability to sign a Letter of Intent (LoI) necessary for formally requesting $7 billion from the International Monetary Fund (IMF).
Finance Minister Muhammad Aurangzeb and the State Bank of Pakistan (SBP) governor Jameel Ahmad are expected to sign the LoI on behalf of the government. This commitment is crucial for dispatching the request to the IMF’s executive board for the approval of the $7 billion EFF programme, which spans 37 months.
The external financing issue has emerged as a significant obstacle in securing this fresh bailout package from the IMF. Recently, the IMF released its calendar of scheduled agenda items for its executive board, and Pakistan was notably absent from the list of countries under consideration for loan approvals until August 28, 2024.
When contacted about the status of the LoI and the IMF’s upcoming deliberations, Aurangzeb stated, “We are making good progress towards getting the board approval in September 2024.”
Pakistan and the IMF reached a staff-level agreement on July 12, 2024, with expectations that Islamabad’s request would be reviewed by the IMF’s executive board within four to six weeks. The IMF’s statement during the agreement emphasized that it was contingent upon timely confirmations of necessary financing assurances from Pakistan’s development and bilateral partners.
For the current fiscal year 2024-25, Pakistan must repay $26.2 billion in external debt, including a rollover of $12.3 billion in deposits. The government has informed the IMF that these foreign deposits will be rolled over for one year. While the government sought a three-year rollover, commitments from countries such as Saudi Arabia, China, and the United Arab Emirates (UAE) have only been secured for one year.
