Pakistan has made a formal request to the International Monetary Fund (IMF) for another bailout package of between US$6 billion to US$8 billion.

The bail out is being sought under the IMF’s under Extended Fund Facility (EFF), with possibility of augmentation through climate financing. The exact size and timeframe will only be determined after evolving consensus on the major contours of the next programme due next month.

A Pakistani delegation was in Washington last week attending the annual spring meetings of the IMF/World Bank, where a request was made for the fund to dispatch a review mission next month to firm up details of the next bailout package of three years under the EFF programme.

The IMF in its latest regional economic outlook, released by Middle East and Central Asia Department, stated that Pakistan’s external buffers deteriorated, mostly reflecting ongoing debt service, including Eurobond repayments.

After contracting in 2023, growth in Pakistan is projected to rebound to 2.0% in 2024, supported by continuing positive base effects in the agriculture and textile sectors. Meanwhile, Finance Minister Muhammad Aurangzeb told the World Bank last week that with Pakistan’s reform agenda fully implemented in key areas, the economy has the potential to grow to US$3 trillion by 2047.

Pakistan hopes to agree the contours of a new IMF loan in May, Aurangzeb told Reuters, and has kicked off talks with ratings agencies to lay the groundwork for a return to international debt markets.

“We expect the IMF mission to be in Islamabad around the middle of May — and that is when some of these contours will start developing,” said Aurangzeb, who met with IMF Managing Director Kristalina Georgieva last Wednesday during the spring meetings.

Aurangzeb reported that once the IMF loan was agreed, Pakistan would also request additional financing from the multilateral financier under the Resilience and Sustainability Trust.

Pakistan also hopes to come back to the international capital markets, possibly with a green bond. However, there was some more work to be done before that happens, he explained.