Encouraging Developments in Pak-IMF Talks
ISLAMABAD: US Ambassador Donald Blome expressed optimism over the ongoing negotiations between Pakistan and the International Monetary Fund (IMF) on Wednesday, as the global lending agency confirmed its executive board meeting for April 29 to discuss the approval of $1.1 billion funding for the South Asian state.
Second Tranche of IMF Funding on the Horizon
The funding is the second and last tranche of a $3 billion standby arrangement with the IMF, which it secured last summer to avert a sovereign default and which runs out this month. Pakistan is now seeking a new long-term and larger IMF loan, with finance minister Muhammad Aurangzeb saying Islamabad could secure a staff-level agreement on the fresh program by early July.
Ambassador Blome’s Optimism
Ambassador Blome praised the performance of the country’s economic team in a meeting with the newly elected Senate chairman, Yousaf Raza Gillani, at the Parliament House wherein he also discussed strengthening of US-Pakistan bilateral relations.
Positive Economic Indicators
“Acknowledging the positive economic indicators of Pakistan, Ambassador Blome noted the downward trend in inflation and high dollar reserves, stating that the IMF’s positive feedback would encourage investors,” said an official statement issued after the meeting. “He highlighted the flourishing gaming industry in Pakistan and called for enhanced [US-Pakistan] cooperation in the digital sector.”
Potential for Economic Cooperation
The American envoy also noted the potential for further economic cooperation between the two countries in his conversation.
Economic Challenges Ahead
Pakistan’s $350 billion economy faces a chronic balance of payment crisis, with nearly $24 billion to repay in debt and interest over the next fiscal year — three times more than its central bank’s foreign currency reserves.
Economic Projections
Pakistan’s finance ministry expects the economy to grow by 2.6 percent in the current fiscal year ending June, while average inflation is projected to stand at 24 percent, down from 29.2 percent in fiscal year 2023/2024. Inflation soared to a record high of 38 percent last May.
