By Abid Chaudhry
TWA
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The International Monetary Fund (IMF) has postponed the approval of Pakistan’s $7 billion bailout package, initially expected on August 30, 2024. The delay has sparked concerns about Pakistan’s economic direction and the credibility of its policymakers.
Government officials revealed that the IMF board’s decision was contingent on Pakistan securing credible assurances to meet its $26.4 billion external debt repayment obligations for the current fiscal year. However, the government has struggled to secure the necessary rollovers of foreign debts, particularly $5 billion from Saudi Arabia and $7.9 billion from China, who have their own reservations.
Finance Minister Muhammad Aurangzeb had previously assured that the IMF programme would receive approval by the end of August. Despite making significant fiscal adjustments, including imposing Rs1.8 trillion in new taxes and raising electricity prices by up to 51%, the government has yet to fill a critical $2 billion financing gap.
The IMF has not provided a new date for the approval of the bailout, leaving Pakistan’s financial stability in a precarious position. The delay highlights the challenges Pakistan faces in balancing its international alliances and securing essential financial support from key global partners, including China and the United States.
The Ministry of Finance has indicated that Pakistan’s estimated gross financing needs for the fiscal year 2024-25 stand at Rs32 trillion, excluding central bank obligations. The success of Pakistan’s borrowing plan heavily relies on the timely approval of the IMF programme and the extension of Chinese debt rollovers.
