Islamabad – The incoming government in Pakistan is likely to sign a new $10 billion loan programme with the International Monetary Fund (IMF), according to sources.
The Ministry of Finance and IMF are said to be in talks over an Extended Fund Facility arrangement to secure a fresh three-year loan after the current programme ends on March 31, 2024.
Sources claim the Finance Ministry aims to get IMF approval for a new Extended Fund Facility spanning three years. The Ministry would guarantee meeting all requirements before finalising the deal.
The IMF would then provide recommendations for the 2024-2025 federal budget to the Finance Ministry.
Under the proposed loan package, gas and electricity costs are expected to increase further, with subsidies reduced. Sources say terms may be stricter than the current arrangement.
Pakistan has been in an IMF programme for over three years as it battles a balance of payments crisis. The country is in desperate need of external financing.
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The new loan would bring total borrowing from the IMF to over $20 billion since 2019 as Pakistan struggles with political instability and economic turmoil.
Experts say the next government will likely agree to unpopular reforms to unlock the fresh bailout. This could include further subsidy cuts and new taxes.
An IMF deal is widely seen as essential for Pakistan to avoid default. But its conditions involving austerity and energy hikes will squeeze households already facing high inflation and poverty.
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