By Staff Reporter
ISLAMABAD: Pakistan is seeking a new loan from the International Monetary Fund (IMF) and hopes to agree on the contours of the deal in May, the country’s Finance Minister Muhammad Aurangzeb said in an interview with Reuters.
Aurangzeb said the new loan with the IMF would replace the current $3 billion Stand-By Arrangement (SBA) that expires in late April.
The new loan is expected to be larger and longer-term, with Pakistan seeking at least $6 billion to help bring permanence to macroeconomic stability and implement much-needed structural reforms.
Aurangzeb, however, declined to specify the size of the loan
“We expect the IMF mission to be in Islamabad around the middle of May, and that is when some of these contours will start developing,” Aurangzeb said.
The minister said the country would request additional financing from the IMF under the Resilience and Sustainability Trust once the loan is agreed upon.
Pakistan has made progress in recent months, accumulating foreign exchange reserves and reducing its debt burden. The country’s foreign exchange reserves are expected to reach $10 billion by the end of June, equivalent to two months’ import cover.
“The bulk of our bilateral debt, including our China debt, is being rolled over, so in that sense, I think we are in good shape, and I don’t see a big issue during this fiscal year or next fiscal year,” Aurangzeb said.
Pakistan also hopes to return to international capital markets, possibly with a green bond but needs to improve its sovereign rating first. The country has kicked off talks with ratings agencies and hopes to achieve a rating improvement in the next fiscal year.
Aurangzeb expects Moody’s Investor Service to upgrade Pakistan’s credit rating soon, reflecting the country’s improved economic fundamentals and commitment to reforms.
“We have to come back into a certain ratings environment,” Aurangzeb said. “In all likelihood, any international capital markets issuance will likely be in the 2025/2026 fiscal year.”
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