Pakistan is in discussions with the International Monetary Fund on a potential follow-up program to its nine-month, $3 billion stand-by arrangement, IMF chief Kristalina Georgieva said on Thursday, adding that it had important issues to solve.
Georgieva told an event at the Atlantic Council think tank, that Pakistan was successfully completing its existing program with the IMF and its economy was performing somewhat better, with reserves now being built up.
“There is a commitment to continue on this path, and the country is turning to the fund for potentially having a follow-up program,” Georgieva said, flagging issues that the struggling South Asian nation still needed to address.
“There are very important issues to be solved in Pakistan: the tax base, how the richer part of society contributes to the economy, the way public spending is being directed and of course, creating … a more transparent environment.”
Pakistan and the IMF last month reached a staff-level agreement on the second and last review of the $3 billion stand-by arrangement, which, if cleared by the global lender’s board, will release about $1.1 billion to the struggling South Asian nation. The IMF’s board is expected to review the matter in late April, but no firm date has been set, a spokesperson said.
Both sides have also spoken about negotiating a longer-term bailout and continuing with necessary policy reforms to rein in deficits, build up reserves and manage soaring debt servicing.
Pakistan will discuss an Extended Fund Facility with the IMF in Washington this month, Finance Minister Muhammad Aurangzeb said in March.
Cash-strapped Pakistan’s standby $3 billion arrangement with the global lender expires on April 11, and the two sides reached a staff-level agreement regarding the disbursal of the final tranche of $1.1 billion earlier this week.
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 in February, 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.
