Written by Aliba Shahid, Asif Shahzad
KARACHI (Reuters) – The International Monetary Fund’s board will meet on April 29 to discuss approving $1.1 billion in funding to Pakistan, the fund said on Wednesday.
The funding is the second and final tranche of a $3 billion standby agreement with the IMF, set aside last summer to avert a sovereign debt default and set to expire this month.
The South Asian country is seeking new long-term, large-scale IMF financing. Pakistan’s Finance Minister Muhammad Aurangzeb said Islamabad could win staff-level agreement on the new program by early July.
Islamabad has said it is seeking at least a three-year loan to support macroeconomic stability and carry out long-overdue and painful structural reforms, but Prime Minister Aurangzeb remains uncertain as to what kind of program the country will pursue. It has refused to elaborate on what it is trying to seize.
Islamabad has not yet made a formal request, but the fund and the government are already in talks.
If secured, it would be the IMF’s 24th bailout for Pakistan.
The $350 billion economy faces a chronic balance of payments crisis and will have to repay nearly $24 billion in debt and interest next year, three times the central bank’s foreign exchange reserves. .
Pakistan’s Ministry of Finance expects economic growth to be 2.6% this year to June, but average inflation is expected to be 24%, down from 29.2% in 2023/2024. In May last year, the inflation rate rose to an all-time high of 38%.
(Reporting by Aliba Shahid and Asif Shahzad; Writing by Rodrigo Campos; Editing by Karin Strohecker)
