Pakistan has requested an $8 billion loan package from the International Monetary Fund (IMF) to fully utilize its remaining quota under the Extended Fund Facility (EFF), which is $2 billion more than the IMF’s current offer.
Sources indicate that, in addition to multiple prior actions, discussions are ongoing regarding the size of the new bailout package and potential loans from traditional bilateral creditors. Pakistan aims to secure $8 billion through the EFF, plus any financing available under the Resilient and Sustainability Facility (RSF). The IMF, however, has suggested a $6 billion deal contingent on meeting all conditions.
Pakistan’s IMF quota is 2.03 billion Special Drawing Rights (SDRs) or $2.7 billion, allowing for a maximum of 435% of this quota, equating to $11.7 billion. With $3.3 billion already utilized, Pakistan’s remaining quota is approximately $8.4 billion. The finance ministry seeks to use almost the entire quota, though the IMF has so far indicated $6 billion.
Higher borrowing will attract stricter conditions, including additional revenue measures equal to 1.6% of GDP or Rs2 trillion. A finance ministry spokesperson did not comment on the proposed package size, but a senior official confirmed Pakistan’s request for $8 billion, with the final decision pending IMF management approval.
Pakistan’s substantial financing needs for the next fiscal year require support from multiple creditors. The IMF acknowledged ongoing virtual policy discussions to finalize necessary financial support from the IMF and Pakistan’s bilateral and multilateral partners.
The PML-N government has decided against requesting new cash deposits from traditional bilateral creditors. Prime Minister Shehbaz Sharif declared in the UAE that Pakistan would no longer seek bilateral loans, breaking the “begging bowl.” Saudi Arabia, the UAE, and China have already deposited $12 billion with the central bank, with $5 billion maturing in July.
The IMF mission returned to Washington last month without finalizing a deal, pending further discussions and IMF Board approval. Finance Minister Muhammad Aurangzeb assured the PPP leadership that the staff-level agreement signing would not require prior Board approval.
The government briefed the PPP on the IMF’s conditions, which include budget approval, increases in electricity and gas prices, renegotiation of the National Finance Commission (NFC) award, and prior approval of supplementary grants by Parliament.
Additionally, the IMF requires parliamentary approval of four presidential ordinances issued in December under the previous $3 billion program. These ordinances aim to improve governance in four state-owned entities and align with the State Owned Enterprises (Governance and Operations) Act, 2023.
