WASHINGTON: Pakistan is on the verge of finalizing a preliminary agreement with the International Monetary Fund (IMF) this week, according to Finance Minister Muhammad Aurangzeb. This marks an important step toward securing another $1.24 billion installment from the global lender.
Last week, an IMF mission departed Pakistan without reaching a formal staff level agreement on the second review of the IMF’s $7 billion Extended Fund Facility (EFF) and the initial review of the $1.4 billion Resilience and Sustainability Facility (RSF), both approved in 2024 to stabilize the economy following a major financial crisis.
In an interview with Reuters during the IMF-World Bank annual meetings, Aurangzeb said, “The mission was here for several weeks, and we had very productive discussions regarding quantitative and structural benchmarks. We are currently engaged in follow-up talks, and we hope to finalize the Staff Level Agreement (SLA) within this week.”
Regular reviews are mandatory for countries participating in IMF programs. Once the review is approved by the IMF’s executive board, it triggers the release of the next tranche of funding.The IMF program, initiated in September 2024, played a crucial role in stabilizing Pakistan’s economy, which was severely strained with inflation reaching record levels, a rapidly depreciating currency, and a large external deficit.
Aurangzeb also indicated plans to launch Pakistan’s first green Panda bond, denominated in Chinese yuan, before the end of the year, with intentions to return to international markets next year for a bond issuance of at least $1 billion. He noted, “We’re keeping our options open—whether it’s euro, dollar, Sukuk, or Islamic Sukuk.” On the privatization front, progress is expected to accelerate in the upcoming fiscal year ending June, after last year’s disappointing results. The government views privatization as a key part of its economic reform and fiscal stabilization strategy.
Pakistan is also advancing plans to privatize three power distribution companies and the national airline, Pakistan International Airlines (PIA). Aurangzeb expressed optimism about attracting qualified bidders for PIA, noting that recent routes to Europe and Britain have enhanced its appeal, making it a promising investment opportunity.
This privatization effort will be Pakistan’s first major sale of state assets in nearly twenty years. A previous attempt failed last year after receiving only a low-ball offer, but interest has since been renewed, with five domestic firms including Airblue, Lucky Cement, Arif Habib, and Fauji Fertilizer showing interest.
