The International Monetary Fund (IMF) is scheduled to send a mission to Pakistan this month to discuss the possibility of a new program. This development comes as Pakistan embarks on its annual budget-making process for the upcoming financial year. With the completion of a short-term $3 billion program last month, which helped prevent a sovereign default, the government is now emphasizing the necessity of a fresh, longer-term arrangement.
IMF's Statement
According to the IMF, the mission's primary objective during the visit is to engage in discussions regarding the fiscal year 2025 budget, policy implementations, and reforms under a potential new program aimed at improving the well-being of all Pakistanis. The statement also emphasizes the importance of expediting reforms over the size of the program itself. The focus will be on a comprehensive package of reforms and addressing the country's balance of payments requirements.
Despite narrowly avoiding default last year, Pakistan's $350 billion economy continues to grapple with challenges. While inflation has decreased from its peak of 38% in May to around 17% in April, the country still faces a significant fiscal deficit. The measures taken to control the external account deficit through import controls have led to stagnant growth, with an anticipated growth rate of only 2% this year, compared to negative growth the previous year.
In a recent interview with Reuters, Finance Minister Muhammad Aurangzeb expressed hope for reaching an agreement on a new IMF loan in May. Pakistan is likely to request a loan of at least $6 billion, along with additional financial assistance under the Resilience and Sustainability Trust. The minister's statements highlight the country's eagerness to secure financial support to address its economic challenges and promote sustainable growth.
The upcoming visit of the IMF mission to Pakistan signifies a critical juncture in the country's economic trajectory. As Pakistan navigates the complexities of its financial landscape, the decisions made in the context of a new IMF program will have far-reaching implications for its economy and the well-being of its citizens. It is imperative for policymakers to prioritize structural reforms and sustainable economic strategies to ensure long-term stability and growth.