Pakistan PM Discusses New Loan Programme with IMF Chief on WEF Sidelines

Pakistan's PM Shehbaz Sharif met IMF chief Georgieva, reaffirming commitment to economic reforms. Discussions on a new IMF bailout program to address Pakistan's balance of payments crisis and debt repayments.

Waqas Arain
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Pakistan PM Meets IMF Chief, Reaffirms Commitment to Economic Recovery

Pakistan PM Meets IMF Chief, Reaffirms Commitment to Economic Recovery

Prime Minister of Pakistan Shehbaz Sharif met with International Monetary Fund (IMF) Managing Director Kristalina Georgieva in Riyadh, reaffirming Pakistan's commitment to putting the country's economy back on track. The meeting took place on the sidelines of the World Economic Forum Special Meeting.

During the meeting, Prime Minister Sharif thanked Georgieva for the IMF's support in securing a $3 billion Standby Arrangement (SBA) for Pakistan last year, which is now nearing completion. The IMF Executive Board is expected to meet on Monday to decide on the final $1.1 billion tranche under the SBA.

Sharif informed the IMF chief that his government is fully committed to implementing structural reforms, ensuring fiscal discipline, and pursuing prudent policies to achieve macroeconomic stability and sustained economic growth. He said he has directed his financial team to implement these measures.

The two sides also examined the possibility of Pakistan entering into another IMF program after the current SBA expires this month. Islamabad is seeking a larger, long-term Extended Fund Facility (EFF) agreement with the IMF to consolidate the gains made in the past year and maintain positive economic growth.

Georgieva appreciated Sharif's leadership in securing the $3 billion SBA last year and shared the IMF's perspective on the ongoing program with Pakistan, including the review process. She acknowledged that while Pakistan has made progress, the country still faces economic challenges.

Why this matters: Pakistan is facing a chronic balance of payments crisis and needs to repay nearly $24 billion in debt and interest over the next fiscal year. Securing a new IMF bailout is vital for Pakistan to avert a sovereign default and put its economy on a path to recovery.

Finance Minister Muhammad Aurangzeb, who also attended the meeting, expressed confidence in the government's efforts to improve the economy. He cited increased tax collection and a reduction in the current account deficit as signs of progress. "The IMF program is vital for the economy," Aurangzeb stressed, adding that the government's initiatives have had a positive impact, with the central bank's reserves increasing from $3.4 billion to $8 billion.

Key Takeaways

  • PM Shehbaz Sharif met IMF chief Georgieva, reaffirming Pakistan's commitment to reforms.
  • Pakistan seeking a new IMF bailout after current $3B SBA nears completion.
  • Sharif assured implementation of structural reforms and fiscal discipline for stability.
  • IMF acknowledged Pakistan's progress but said economic challenges remain.
  • New IMF bailout vital for Pakistan to avert default and spur economic recovery.