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IMF Delegation Coming To Pakistan For Bailout Assessment

IMF Delegation Coming To Pakistan For Bailout Assessment

An IMF delegation is set to arrive in Pakistan on Wednesday to conduct the final review of a $3 billion standby arrangement, according to two sources.

The four-day review is scheduled to commence on Thursday, as disclosed by two finance ministry officials speaking anonymously due to confidentiality restrictions. Islamabad had secured this rescue package last summer to prevent a sovereign default. Successful completion of the last review would result in the disbursement of approximately $1.1 billion.

Read more: Pakistani Legislator Joins IMF, World Bank Board

Prime Minister Shehbaz Sharif has instructed his finance team, led by newly appointed Finance Minister Muhammad Aurangzeb, to begin preparations for seeking an Extended Fund Facility (EFF) once the standby arrangement expires on April 11. Aurangzeb confirmed the imminent arrival of the IMF team this week but did not specify a date.

The IMF has indicated its readiness to formulate a medium-term program if Pakistan submits an application. Aurangzeb expressed Pakistan’s keenness to discuss another EFF during the upcoming talks and suggested that further negotiations on a larger, longer-term program would take place during the IMF and World Bank’s spring meetings in April in Washington.

During the review process, Aurangzeb aims to initiate discussions and assess the IMF’s response. His appointment comes amidst the challenge of stabilizing an economy plagued by recurring boom-bust cycles, which have necessitated over 20 IMF bailout programs in the past.

Pakistan’s debt-laden economy, experiencing a contraction of -0.2 percent last year and forecasted to grow by approximately 2 percent this year, is grappling with low reserves, a balance of payments crisis, soaring inflation at 23 percent, policy interest rates at 22 percent, and unprecedented depreciation of the local currency.