Pakistan plans to seek a new loan of at least $6 billion from the International Monetary Fund to help the incoming government repay billions in debt due this year, Bloomberg News reported on Thursday, citing a Pakistani official.

The country will seek to negotiate an Extended Fund Facility with the IMF, the report said, adding that the talks with the global lender were expected to start in March or April.

Pakistan averted default last summer thanks to a short-term International Monetary Fund bailout, but the programme expires next month and a new government will have to negotiate a long-term arrangement to keep the $350 billion economy stable.

Ahead of the bailout, the South Asian nation had to undertake a slew of measures demanded by the IMF, including revising its budget, a hike in its benchmark interest rate, and increases in electricity and natural gas prices.

The IMF staff continues a dialogue with authorities on needed longer-term reform efforts, a spokesperson for the fund said, adding that the fund is available, if requested, to support the post-election government through a new arrangement to address Pakistan’s ongoing challenges.

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Pakistan’s caretaker finance minister did not immediately respond to a Reuters request for comment on the Bloomberg report.

Pakistan’s vulnerable external position means that securing financing from multilateral and bilateral partners will be one of the most urgent issues facing the next government, ratings agency Fitch said on Monday.

“A new deal is key to the country’s credit profile, and we assume one will be achieved within a few months, but an extended negotiation or failure to secure it would increase external liquidity stress and raise the probability of default,” it said.

Moreover, the IMF said that it was looking forward to engaging with the new government on policies to ensure “macroeconomic stability and prosperity for all of Pakistan’s citizens”.

‘IMF looking forward to working with new govt’

Julie Kozack, the head of the Communications Department at the IMF, was asked about whether Pakistan was on track to secure the third tranche of the stand-by agreement reached in June 2023 during a press briefing held early on Friday.

“On January 11, the IMF Executive Board approved the first review of the Stand-By Arrangement, with Pakistan that brought total disbursements under the Stand-By Arrangement to $1.9 billion. The Stand-By Arrangement is supporting the authority’s efforts to stabilise the economy and to, of course, with a strong focus on protecting the most vulnerable,” she said in her response.

Kozack added that during the tenure of the interim government, the authorities had “maintained economic stability”.

“This has been done through strict adherence to fiscal targets while also protecting the social safety net. It has been done by maintaining a tight monetary policy stance to control inflation and to continue to build up foreign exchange reserves,” she said.

“We look forward to working with the new government on policies to ensure macroeconomic stability and prosperity for all of Pakistan’s citizens. And I am going to leave it at that,” she said.

She was also asked whether the IMF would entertain any letter by Imran calling for investigations into election irregularities.

“I’m not going to comment on ongoing political developments. So, I don’t have anything else to add to what I just said.”