In Karachi, the IMF has announced that its team will be visiting Pakistan this month to discuss the potential for a new loan program.
Islamabad has commenced the annual budget preparations for the upcoming financial year. The IMF noted that Pakistan successfully concluded its previous short-term program of $3 billion, which played a crucial role in averting bankruptcy. Prime Minister Shehbaz Sharif is advocating for a new long-term loan arrangement with the IMF.
An IMF delegation is anticipated to arrive in Pakistan during May to engage in discussions regarding the 2025 budget, policies, and potential reforms under a prospective new loan program aimed at benefitting the Pakistani populace. The IMF, in response to Reuters, mentioned that the Shahbaz Sharif-led government will present its inaugural budget for the period spanning from July 2024 to June 2025 prior to June 30.
Specific details such as the exact date of the mission’s visit and the duration of the program were not provided by the IMF. However, it emphasized that the pace of reforms holds more significance than the program’s size for Pakistan presently. The extent of the program will be determined by the combination of reform measures and the country’s balance of payments situation. Pakistan encountered a near financial collapse last summer.
Previous IMF initiatives have aided in stabilizing Pakistan’s $350 billion economy. Despite facing fiscal deficits, there has been a significant reduction in inflation, dropping from 38% in May 2023 to 17% in April 2024. Pakistan has managed its balance of external payments through import control mechanisms, albeit at the expense of economic growth, which is anticipated to reach 2% this year compared to the previous year’s negative growth rate.