IMF mission expected in Pakistan this month to discuss new loan deal

ISLAMABAD, MAY 5: The International Monetary Fund’s (IMF) mission is expected to visit Pakistan this month to discuss a new programme, the lender confirmed on Sunday ahead of Islamabad beginning its annual budget-making process for the next financial year.

Pakistan last month completed a short-term $3 billion programme, which helped stave off sovereign default, but Prime Minister Shehbaz Sharif’s government has stressed the need for a fresh, longer-term programme.

“A mission is expected to visit Pakistan in May to discuss the FY25 budget, policies, and reforms under a potential new programme for the welfare of all Pakistanis,” the IMF said in an emailed response to Reuters.

The federal government’s financial year runs from July to June and its budget for fiscal year 2025, the first by under PM Shehbaz’s new government, has to be presented before June 30.

The IMF did not specify the dates of the visit, nor the size or duration of the programme in its response to Reuters.

“Accelerating reforms now is more important than the size of the program, which will be guided by the package of reform and balance of payments needs,” the IMF statement said.

Pakistan narrowly averted default last summer, and its $350bn economy has stabilised after the completion of the last IMF programme, with inflation coming down to around 17 per cent in April from a record high 38pc last May.

The government is still dealing with a high fiscal shortfall and while it has controlled its external account deficit through import control mechanisms, it has come at the expense of stagnating growth, which is expected to be around 2pc this year compared to negative growth last year.

Earlier, in an interview with Reuters, Finance Minister Muhammad Aurangzeb said the country hoped to agree on the contours of a new IMF loan in May.

Pakistan is expected to seek at least $6bn and request additional financing from the Fund under the Resilience and Sustainability Trust.