Daily Times

Pakistan has initiated discussions with the International Monetary Fund (IMF) over a new multi-billion dollar loan agreement to support its economic reform program, said Finance Minister Muhammad Aurangzeb.

The country is nearing the end of a nine-month, $3 billion loan programme with the IMF designed to tackle a balance-of-payments crisis which brought it to the brink of default last summer. With the final $1.1 billion tranche of that deal likely to be approved later this month, Pakistan has begun negotiations for a new multi-year IMF loan programme worth “billions” of dollars, Aurangzeb said during an interview in Washington. “The market confidence, the market sentiment is in much, much better shape this fiscal year,” said the minister, a former banker who took up his post last month.

“It’s really for that purpose that, during the course of this week, we have initiated the discussion with the Fund to get into a larger and an extended programme,” he added.

An IMF spokesperson told AFP that the Fund is “currently focused on the completion of the current Stand-by Agreement programme,” referring to the ongoing nine-month program scheduled for completion shortly. “The new government has expressed interest in a new programme, and Fund staff stands ready to engage in initial discussions on a successor programme,” the spokesperson added. During his visit to Washington, Aurangzeb will also attend the spring meetings organised by the IMF and World Bank, which kick off in earnest Tuesday, with two clear objectives: to help countries combat climate change, and to assist the world’s most indebted nations.

The meetings — which bring central bankers together with finance and development ministers, academics, and representatives from the private sector and civil society to discuss the state of the global economy — will kick off with the IMF’s publication of its updated World Economic Outlook. Pakistan held elections in February this year which were marred by allegations of rigging, with PTI chief Imran Khan jailed and barred from running, and his party subject to a crackdown. The shaky coalition that emerged, led by Shehbaz Sharif, is now tasked with engineering an economic turnaround by implementing a raft of unpopular belt-tightening measures. “I do think that we will at least be requesting for a three-year programme,” Aurangzeb said. “Because that’s what we need, as I see it, to help execute the structural reform agenda.” “By the time we get to the second or third week of May, I do think we’ll start getting into the contours of that discussion,” he added.

Pakistan has close economic ties to both the United States and China, which has put it in a tricky position as the two countries have embarked upon a costly trade war.

“From our perspective it has to be an and-and discussion,” Aurangzeb said when asked how the Shehbaz government plans to conduct its trading relationships with the world’s two largest economies. “[The] US is our largest trading partner, and it has always supported us, always helped us in terms of the investments,” he said. “So that is always going to be a very, very critical relationship for Pakistan.”