Pakistan’s Path to Enhanced IMF support:
o Pakistan is scheduled to engage with the IMF from 14th Mar to 18th Mar, primarily focusing on the last review of the SBA program. Additionally, Pakistan aims to initiate discussions regarding the next IMF program.
o A noteworthy difference between previous IMF programs and the new one is that the incumbent program will be entered into with prior actions largely implemented already.
o Anticipating successful completion of the SBA program’s last review, Pakistan expects a disbursement of around USD 1.1bn by Apr’24.
o However, heavy external debt servicing obligations loom, with total gross financing needs for FY25 amounting to USD 22bn.
o Moreover, as per media reports, repayments of USD 4.33bn are due in 4QFY24, including:
o USD 1bn Pakistan’s International Bond maturing in Apr’24
o USD 1bn to China as part of a Chinese SAFE deposit (most likely gov’t will be requesting a rollover of this deposit for another year)
o USD 706mn to bilateral creditors
o USD 754mn to multilateral creditors with significant portions owed to institutions like the ADB and the World Bank’s IDA.
o Given these substantial repayments, Pakistan is expected to negotiate a new program with the IMF. Several options are being discussed, including:
o An increase of the fund in the existing Standby Arrangement program of Jun’23
o A new Extended Fund Facility (EFF)
o An Extended Fund Facility combined with newly established Resilience and Sustainability Facility (RSF)