The International Monetary Fund (IMF) said on Tuesday it has reached a staff-level agreement with Pakistan on its loan programme, which would allow the country to access $1.2 billion after a review.
Subject to a board review, the IMF will provide Pakistan $1 billion under its Extended Fund Facility (EFF) and $200 million under its Resilience and Sustainability Facility (RSF), bringing total disbursements under the two arrangements to about $3.3 billion.
Finance Minister Muhammad Aurangzeb said earlier that the country was set to sign a preliminary deal with the IMF.
An IMF team left Pakistan last week without signing staff-level agreements on reviews of its two main support programmes, which are worth a combined $8.4 billion.
“The mission was on the ground for a couple of weeks, we had very constructive dialogue with them around the quantitative benchmarks, the structural benchmarks, and we’ve been having some follow-up discussions,” Finance Minister Muhammad Aurangzeb told Reuters during an interview on the sidelines of the IMF World Bank annual meeting.
Countries under IMF lending programmes need to pass regular reviews, which, once signed off by the Fund’s executive board, trigger a payment of the next tranche of IMF funding.
The IMF programme agreed in September 2024 helped shore up then-cash-strapped Pakistan’s $370 billion economy that was engulfed in an economic crisis with inflation spiraling to record highs, a rapidly depreciating currency, and a bulging external deficit.
Aurangzeb expected the government would launch a green Panda bond – the first one denominated in Chinese yuan for Pakistan – before year-end and return to international markets next year with a bond sale of at least $1 billion, though details were still to be decided.
“Euro, dollar, Sukuk, Islam Sukuk — we’re keeping our options open,” he said.
Meanwhile, the privatisation push — part of a long-delayed sale of state assets under an economic reform and fiscal stabilisation agenda — was expected to gain traction in the fiscal year to end-June after disappointing results last year.
“This is something which is very important as part of our economic roadmap,” he said.
Pakistan was also making progress on the sale of three power distribution companies and the national carrier Pakistan International Airlines (PIA).
“We are quite hopeful,” Aurangzeb said, citing prospects for qualified bidders for PIA after lucrative routes to Europe and Britain were opened, which made it “a very good proposition for the investors.”
The transaction would mark the country’s first major privatisation in about two decades. A previous attempt collapsed last year after a single lowball offer was received, but the government has since drawn interest from five domestic business groups, including Airblue, Lucky Cement, investment firm Arif Habib and Fauji Fertiliser.
Final bids are expected later this year.
FinMin reaffirms commitment to reform agenda
The finance minister had a busy first day of his official visit to the United States with a series of high-level meetings on the sidelines of the Annual Meetings of the IMF and the World Bank Group (WBG) in Washington.
FinMin Aurangzeb and his delegation had a key meeting with Jihad Azour, Director of the IMF’s Middle East and Central Asia Department, and his team.
Both sides exchanged views on Pakistan’s reform agenda and reaffirmed their shared commitment to sustaining the current momentum of reforms.
The meeting reviewed progress under the Second Review of the Extended Fund Facility (EFF) and acknowledged the importance of maintaining macroeconomic discipline.
Earlier, Senator Aurangzeb also attended the Commonwealth Finance Ministers’ Meeting where he underscored the importance of prioritising concrete actions to advance a resilient and prosperous Commonwealth.
In another meeting, Senator Aurangzeb had extensive engagement with Axel van Trotsenburg, Senior Managing Director of the World Bank Group.
He expressed appreciation for the World Bank’s continued commitment to Pakistan’s national development agenda.
The finance minister also held a productive meeting with Robert Kaproth, Assistant US Treasury Secretary for International Finance, and Counselor Jonathan Greenstein.
During the discussion, the finance minister highlighted the strong economic fundamentals of Pakistan, underpinned by the ongoing IMF programme.
He welcomed the successful conclusion of negotiations with the US administration leading to a tariff deal and apprised the Treasury officials about Pakistan’s recent legislation to regulate virtual assets.
