ISLAMABAD: Pakistan is set to engage in discussions with the International Monetary Fund (IMF) in Washington next month regarding an Extended Fund Facility (EFF), announced Finance Minister Muhammad Aurangzeb on Friday, in efforts to mitigate a looming full-scale economic crisis.
With Pakistan facing financial strain, its $3 billion standby arrangement with the global lender is due to expire on April 11. A staff-level agreement was recently reached between the two parties for the disbursement of the final tranche of $1.1 billion.
“We have communicated our strong interest in securing an Extended Fund Facility with the IMF, although the exact amount remains uncertain,” stated Aurangzeb during a media briefing, noting the lender’s receptiveness to the request.
The minister also highlighted the supportive stance of the United States on the matter.
Following his re-election amidst allegations of electoral misconduct, Prime Minister Shehbaz Sharif instructed his finance team to pursue an extended fund facility from the IMF, deeming it “inevitable.”
The IMF has indicated its willingness to assist in crafting a new economic program for Pakistan upon request.
While last summer’s IMF rescue package helped Pakistan stave off default, it necessitated revisions to the budget and the implementation of measures such as increased interest rates, taxes, and utility prices. Consequently, the nation grappled with soaring inflation, currency depreciation, and economic contraction.
In a bid to stabilize the economy, Finance Minister Aurangzeb expressed interest in issuing Panda Bonds worth up to $300 million to Chinese investors for the first time. This move aims to diversify funding sources and access new markets, leveraging China’s substantial bond market.
Aurangzeb anticipates an initial Panda bond sale of $250 million to $300 million, with subsequent issuances planned. He reassured that Pakistan’s strong cash reserves enable timely debt repayment, minimizing currency pressure, and projecting stability for the rupee.
Regarding future financial endeavors, Aurangzeb emphasized ongoing efforts towards issuing Panda bonds, with plans to access the international bond market once Pakistan’s credit rating improves. He underscores the strategic importance of leveraging Pakistan’s ties with China, aiming to explore opportunities in the Chinese bond market.
(Islamabad51_Newsdesk)
