An International Monetary Fund (IMF) delegation is set to arrive in Pakistan this month to discuss a potential new program as Islamabad embarks on its annual budget-making process for the upcoming financial year. Having recently completed a short-term $3 billion program to avert sovereign default, Prime Minister Shehbaz Sharif’s government emphasizes the need for a longer-term plan.
Responding to Reuters, the IMF stated that the mission’s visit would focus on discussions surrounding the FY25 budget, policies, and reforms to foster the welfare of all Pakistanis. The specific dates and details of the program were not disclosed.
The country’s fiscal year spans from July to August, and Sharif’s new government is required to present the budget for fiscal year 2025 before June 30. While the program’s size remains uncertain, the IMF emphasized that expediting reforms hold greater significance than the program’s magnitude, which the reform package and balance of payments requirements will determine.
Pakistan narrowly escaped default last summer, and its $350 billion economy has stabilized since the completion of the previous IMF program. Inflation has decreased from a record high of 38% in May last year to around 17% in April.
However, the nation continues to grapple with a substantial fiscal deficit. Although import control measures have helped rein in the external account deficit, they have hampered growth, with an expected rate of approximately 2% this year compared to negative growth in the previous year.
Finance Minister Muhammad Aurangzeb expressed hope in an interview with Reuters that the contours of a new IMF loan would be agreed upon in May. Pakistan is anticipated to seek a minimum of $6 billion and explore additional financing from the IMF through the Resilience and Sustainability Trust.
