Finance Minister Senator Muhammad Aurangzeb announced on Tuesday that Pakistan is in the “advanced stages” of securing external financing assurances, a critical step toward gaining the International Monetary Fund (IMF) Executive Board’s approval for a $7 billion loan.
During a briefing, Aurangzeb expressed optimism about meeting the IMF’s conditions, emphasizing the government’s commitment to finalizing the program on time. He praised the efforts of provincial governments and reiterated Prime Minister Shehbaz Sharif’s statement that this will be Pakistan’s last IMF program, contingent on the successful implementation of structural reforms.
The IMF staff and Pakistani authorities had reached a staff-level agreement in July for a 37-month Extended Fund Facility (EFF) Arrangement. However, the approval by the IMF Executive Board is still pending, awaiting the confirmation of financing assurances from Pakistan’s development and bilateral partners.
To address a $2 billion financing gap, Pakistan is seeking the rollover of $12 billion in loans from key allies such as China, Saudi Arabia, and the United Arab Emirates (UAE). Additionally, the country has reportedly requested an additional $1.2 billion loan from Saudi Arabia.
Aurangzeb also highlighted the government’s progress in clearing backlogs, including import letters of credit (LCs) and remittances of dividends and profits, attributing this to improved economic indicators. He noted a significant decrease in inflation, from 23.7% in August 2023 to 9.6% in August 2024, which has led to a gradual reduction in the policy rate, benefiting the industrial sector.
The Finance Minister pointed to recent improvements in Pakistan’s credit ratings by Fitch and Moody’s as evidence that the economy is moving in the right direction. However, he stressed that sustained growth is only possible through stabilization and called for increased tax compliance, particularly from sectors currently underpaying taxes.
Aurangzeb also addressed tax digitization efforts, which are expected to show results starting in September, and reiterated the government’s commitment to reducing the size of the federal government. Despite a recent shortfall in tax collection, he affirmed that the government would not delay necessary reforms.
