IMF to Review Pakistan's External Financing Needs Next Week

Islamabad, November 15, 2023 - The International Monetary Fund (IMF) is set to commence discussions next week to evaluate Pakistan's external financing requirements, focusing on an estimated $2.5 billion gap for the current fiscal year. According to The Express Tribune, the IMF, led by Mission Chief Nathan Porter, will hold unscheduled talks starting Tuesday to assess the necessity for new foreign loans.

The discussions are crucial as Pakistan has yet to secure certain loans, which has complicated efforts to bridge its external financing gap. The first formal review for the release of a $1.1 billion tranche from the IMF is scheduled for March 2025. However, the country is currently facing delays in securing loans from bilateral creditors.

The IMF had previously estimated a $5 billion external financing gap for the period spanning 2024-27, with $2.5 billion needed this fiscal year. Despite the external sector performing better than anticipated, reducing the gap from initial projections, loans are still essential for repaying existing debts, particularly those to Western financial institutions.

In September, the IMF approved a $7 billion financial package for Pakistan. The country has raised expectations of securing $3.2 billion to meet the $2.5 billion debt requirement. Additionally, Pakistan has approached China to reschedule $3.4 billion in debt from the Export-Import Bank of China, with nearly $750 million due this fiscal year.

This upcoming visit by the IMF, occurring roughly six weeks after the loan approval and four months after the planned review, aims to analyze Pakistan's performance against the targets set for July-September 2023. The review will also look into the country's economic strategies and the effectiveness of the financial aid provided so far.

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