Pakistan will discuss an Extended Fund Facility (EFF) with the International Monetary Fund (IMF) in Washington next month, Finance Minister Muhammad Aurangzeb said on Friday, as the country looks to alleviate a full-scale economic crisis.
The 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 $1.1bn earlier this week.
“We have expressed our strong interests in an Extended Fund Facility with the IMF, but the quantum is not clear yet,” Aurangzeb said at a media briefing, adding that the lender was “very receptive” to the request.
The US has also been “very supportive” in the matter, the minister said.
Prime Minister Shehbaz Sharif had directed his finance team to begin work on seeking an extended fund facility from the IMF.
He termed a long-term bailout from the IMF “inevitable” on Thursday.
“[However], is this our ultimate achievement? The answer is a big no. We have to bring economic stability at the macro-level and we have to progress it for which it is decided that we cannot survive without another [IMF] agreement,” Shehbaz had said.
He stressed that the newly elected government would have to work towards a medium-term programme which would have a duration of two-to-three years.
“And during those years, the government will have to undertake deep-rooted structural reforms,” the premier had added.
The IMF had also said it would support formulating a new economic programme for the country if it asks for one.
The global lender’s rescue package last summer had helped Pakistan avert a sovereign default but, to secure it, the country had to revise its budget, and raise interest rates, taxes, and electricity and gas prices.
As a result, during the period, the country struggled through inflation as high as 38 per cent, historic depreciation in its currency and contraction of the economy.
Bonds
Pakistan will also look to bonds in the international market to help stabilise its economy, Aurangzeb said at today’s briefing, adding that, in the meantime, work is being done on Panda bonds.
“Once our credit rating improves, we will be going to the international market for bonds,” he said.
The finance minister has been keen to capitalise on Pakistan’s relationship with China and had earlier also expressed his intention to tap into the Chinese bond market.
In an interview to Bloomberg today, he said Pakistan plans to sell as much as $300 million in Panda bonds this year.