An International Monetary Fund (IMF) mission and Pakistan have made substantial strides toward achieving a staff-level agreement for an extended fund facility (EFF), the global lender announced on Friday.
Following the release of this statement, the Pakistan Stock Exchange (PSX) surged by 556.5 points, reaching 75,670.97 points at 9:41 am, up from the previous close of 75,114.47.
After Pakistan successfully completed a short-term $3 billion programme last month, which helped prevent a sovereign debt default, the IMF has initiated discussions with the country on a new loan program.
Led by mission chief Nathan Porter, an IMF team concluded discussions with Pakistani authorities on Thursday after commencing discussions on May 13.
Porter stated, “The mission and the authorities will continue policy discussions virtually over the coming days aiming to finalize discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan’s bilateral and multilateral partners.”
“The authorities’ reform program aims to transition Pakistan from economic stabilization to robust, inclusive, and resilient growth,” the statement added.
The discussions highlighted plans by Pakistani authorities to strengthen public finances, enhance domestic revenue mobilization, increase spending on human capital, social protection, and climate resilience.
They also aim to address energy sector sustainability, promote low and stable inflation, improve public service provision through state-owned enterprise (SOE) restructuring and privatization, and foster private sector development by ensuring a fair investment environment and stronger governance.
Describing the discussions as “productive,” Porter emphasized that both the global lender and Pakistani authorities will “continue policy discussions virtually over the coming days aiming to finalize discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan’s bilateral and multilateral partners.”
Pakistan is expected to request at least $6 billion under the new program and seek additional financing from the IMF under the Resilience and Sustainability Trust.
The IMF has underscored the importance of prioritizing reforms to revive the Pakistani economy over the size of the new loan package under negotiation.
Prior to the discussions, the IMF had cautioned earlier this month that downside risks for the Pakistani economy remained notably high.
