Updated March 8th, 2024 at 16:56 IST

IMF offers support for new Pakistan economic programme

Sharif's government has initiated talks with the IMF for a new programme after concluding the stand-by arrangement.

Reported by: Business Desk
International Monetary Fund (IMF). | Image:PTI
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The International Monetary Fund (IMF) announced its readiness to assist in formulating a new economic programme for Pakistan if the country's newly elected government expresses the need for one. However, the IMF also stressed on the importance of fair resolution for all electoral disputes within the country.

Pakistan, facing economic challenges, saw a delayed formation of a coalition government after the uncertain February 8 election. Prime Minister Shehbaz Sharif took office on Monday, but the appointment of a new finance minister remains pending.

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An IMF spokesperson stated in an email, "We look forward to engaging with the new government to complete the second review under the current stand-by arrangement and, should the government request, support the formulation of a new medium-term economic program."

Sharif's government has initiated talks with the IMF for a new programme after concluding the stand-by arrangement. Despite securing a $3 billion IMF stand-by arrangement last summer, Pakistan continues to grapple with issues such as record inflation, currency devaluation, and dwindling foreign reserves.

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The party of incarcerated former Prime Minister Imran Khan recently urged the IMF to conduct an audit of the disputed February election before proceeding with further bailout discussions with Islamabad.

While refraining from commenting on domestic political matters, the IMF emphasized the significance of a fair and peaceful resolution to electoral disputes, highlighting the pivotal role of institutional stability in economic growth and stability.

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Zulfikar Bukhari, a close aide to Imran Khan, stressed on the responsibility of lenders in ensuring responsible lending practices, particularly for developing countries striving to manage their debt burdens.

Regarding the IMF's plans, Julie Kozack, the IMF's communications official, stated that after the formation of a new cabinet, the IMF is prepared to send a mission for the second review of the stand-by arrangement. The current program is set to conclude in April.

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Analysts, including Mohammed Sohail, CEO of Karachi-based Topline Securities, suggested that with good compliance under the IMF stand-by arrangement, Pakistan's chances of securing a 3 to 4-year program are high.

In response to the news, Pakistan's sovereign dollar bonds experienced a surge, with the 2036 maturity gaining as much as 4 cents, marking its highest level since early 2022. This uptick indicates growing investor confidence and marks the third consecutive week of gains for Pakistan's bonds.

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(With Reuters inputs)
 

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Published March 8th, 2024 at 16:56 IST