Pakistan’s Prime Minister Stresses Inevitability of Extended IMF Bailout amid Economic Struggles

Pakistan’s Prime Minister, Shehbaz Sharif, emphasized on Thursday that an extended assistance package from the International Monetary Fund (IMF) was unavoidable, given the precarious state of the South Asian nation’s economy.

This statement followed the announcement that the IMF had reached a provisional agreement with Islamabad, pending approval by its board, to disburse the final installment of $1.1 billion under the existing $3 billion standby arrangement.

Addressing a live broadcast meeting in Islamabad, Sharif expressed the hope of securing the $1.1 billion IMF tranche in the coming month, underscoring the nation’s dependence on continued IMF support.

Highlighting the necessity of a comprehensive two-to-three-year IMF program, Sharif stressed that Pakistan’s $350 billion economy, long plagued by severe financial strains and a significant balance of payments crisis, required fundamental structural reforms.

During the recent visit of the IMF mission for the final review of the standby program, Pakistani authorities indicated their interest in seeking further financial assistance.

With the standby arrangement set to expire on April 11, the IMF has indicated its readiness to devise a medium-term program if requested by Islamabad.

Although the government has not officially disclosed the exact amount of additional funding sought in the extended bailout, reports from Bloomberg in February suggested Pakistan’s intention to request a loan of at least $6 billion.

Preceding the standby arrangement, Pakistan had to fulfill IMF conditions, including budget revisions, interest rate hikes, and revenue generation through increased taxes, as well as elevated electricity and gas prices. These measures led to soaring inflation, reaching as high as 38% last summer, alongside a historic depreciation of the local currency and economic contraction.