The International Monetary Fund (IMF) has raised concerns over Pakistan’s ability to meet its debt obligations, citing significant challenges in debt repayment and economic stability. As reported by Geo News, the IMF’s assessment comes amid Pakistan’s request for a fresh bailout package under the Extended Fund Facility.
The IMF’s staff report highlights Pakistan’s vulnerability to risks such as delayed reforms, high public debt, and low reserves, which could undermine policy implementation and debt sustainability. The report emphasizes the critical importance of restoring external viability through strong policy implementation and external asset accumulation.
According to the IMF, Pakistan needs gross financing worth USD 123 billion over the next five years, with significant borrowing expected in the coming fiscal years. The report underscores the country’s reliance on external financing to meet its financial needs, urging accelerated reforms to address economic challenges.
In response to the IMF’s concerns, Pakistan is seeking a rollover of around USD 12 billion in debt from key allies like China to bridge the external financing gap. Additionally, the country plans to secure new financing from international financial institutions like the IMF, World Bank, and Asian Development Bank.
While Pakistan has stabilized its economy since narrowly averting default last summer, it continues to grapple with high fiscal deficits and stagnant growth. Despite efforts to control inflation and stabilize the external account deficit, economic growth remains sluggish, with expectations of only around 2% this year.
Negotiations for a new IMF loan program are set to commence soon, ahead of Pakistan’s budget presentation in June. The outcome of these discussions will be crucial in addressing the country’s economic challenges and ensuring its financial stability in the coming years.
