by: TN Media News Pakistan:
Pakistan is reportedly planning to seek a new loan of at least $6 billion from the International Monetary Fund (IMF) to help the incoming government repay billions in debt due this year. The country intends to negotiate an Extended Fund Facility with the IMF, with talks expected to commence in March or April, as per the report.
Last summer, Pakistan narrowly avoided default thanks to a short-term IMF bailout. However, the program is set to expire next month, and a new government will need to negotiate a long-term arrangement to maintain stability in the $350-billion economy. To secure the previous bailout, Pakistan had to implement several measures demanded by the IMF, including revising its budget, raising its benchmark interest rate, and increasing electricity and natural gas prices.
Neither the IMF nor Pakistan’s caretaker finance minister has immediately responded to requests for comment on the Bloomberg report. Fitch, a ratings agency, highlighted Pakistan’s vulnerable external position, noting that securing financing from multilateral and bilateral partners will be a pressing issue for the next government.
“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,” Fitch stated.
