IMF Urges Pakistan to Secure $8 Billion in Fresh Loans for Debt Repayments Amidst Bailout Package Uncertainty

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The International Monetary Fund (IMF) has reportedly called on Pakistan to secure $8 billion in new loans to support the country’s external debt repayments over the next seven months. The demand comes as the completion of the long-delayed ninth review bailout package faces further obstacles, despite previous assurances from Saudi Arabia and the United Arab Emirates (UAE). The IMF’s request for additional financing has escalated from an earlier condition of $6 billion, reflecting the need to ensure debt repayments scheduled between May and December 2023. According to sources cited by The Express Tribune, the IMF has determined the $8 billion funding requirement by considering all projected inflows and outflows for the specified period. This development follows a prolonged delay in releasing a $1.1 billion tranche from the $6.5 billion IMF package, which has been pending since November.

The last staff-level mission to Pakistan occurred nearly 100 days ago, exacerbating concerns about the disbursement. Meanwhile, Finance Minister Ishaq Dar stated that Pakistan would not make further difficult decisions in response to the IMF’s demands, asserting that the government had already implemented the preconditions set by the IMF. Dar emphasized that it was the IMF’s prerogative to decide whether to sign a staff-level agreement or not. Sources indicate that the IMF’s primary focus now is to ensure that crisis-hit Pakistan avoids defaulting on its debt obligations by arranging sufficient funds for debt repayments. The emphasis has shifted away from bolstering the country’s critically low foreign exchange reserves, as stated in the report.

During a press conference, IMF spokesperson Julie Kozack highlighted Pakistan’s urgent need for “significant additional financing” to successfully complete the ninth review. She cited the challenges of stagflation, substantial financing requirements, and the impact of various shocks, including severe flooding, on the Pakistani economy. In summary, Pakistan faces mounting pressure from the IMF to secure $8 billion in fresh loans to fulfill its external debt repayments. The fate of the bailout package remains uncertain, with the IMF’s focus shifting toward averting a default rather than solely increasing foreign exchange reserves.

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