By Staff Reporter
ISLAMABAD: Pakistan is making progress on a new $7 billion International Monetary Fund (IMF) loan program, targeting September board approval, said Finance Minister Muhammad Aurangzeb on Wednesday.
“We are making good progress with the IMF for board approval in September,” Aurangzeb said in a text message to the media.
The finance minister’s comments followed the release of the IMF’s Executive Board meeting schedule until August 28, from which Pakistan’s name was absent.
The surprise move has raised concerns about the loan’s disbursement timeline and the possibility that the loan may be delayed, just as Pakistan’s economy is struggling to stabilize. A staff-level agreement between Pakistan and the IMF was reached on July 12, but the board’s approval is still pending.
The 37-month Extended Fund Facility program is designed to shore up Pakistan’s economy, boost foreign reserves, and tackle fiscal challenges. However, without the IMF board’s formal approval, the country’s financial outlook remains precarious.
The EFF loan is crucial for addressing Pakistan’s external financing needs, estimated at $26.2 billion for the fiscal year to June 2025. A $3-5 billion financing gap remains, despite the July 12 staff-level agreement.
Aurangzeb and central bank Governor Jameel Ahmad are set to sign a Letter of Intent for the loan, pending confirmation of external financing assurances from development and bilateral partners.
Pakistan is in talks with Saudi Arabia, the UAE, and China to meet its gross financing needs. Rollovers and disbursements from allies have helped bridge financing gaps in the past.
The central bank expects rollovers of $16.3 billion in the fiscal year to June 2025 — more than half of the country’s $26.2 billion external financing requirement.
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