Pakistan’s new Finance Minister, Muhammad Aurangzeb, has initiated talks with the International Monetary Fund (IMF) for a multi-billion dollar loan. This new program aims to support Pakistan’s economic reform agenda.
The request comes as Pakistan nears the completion of its current nine-month, $3 billion IMF loan program. This program was designed to address the country’s balance-of-payments crisis.
Aurangzeb expressed optimism about Pakistan’s economic outlook, citing improved market confidence. He emphasized the need for a “larger and extended program” to achieve long-term economic stability.
The IMF confirmed their focus on finalizing the existing program but acknowledged Pakistan’s interest in a successor program. Discussions on the new program’s structure are expected to begin in May.
The new government, led by Shehbaz Sharif, faces the challenge of implementing economic reforms while navigating a complex global situation. This includes the ongoing trade war between the US and China, both of which are key trading partners for Pakistan.
Aurangzeb emphasized Pakistan’s desire to maintain strong economic ties with both countries. He sees an opportunity for Pakistan to benefit from the trade war, potentially increasing exports to the US.
Privatization of state-owned enterprises (SOEs) remains a key element of Pakistan’s economic reform plan. Pakistan International Airlines (PIA) is the first SOE on the block, with a targeted privatization completion date by June 2024. A successful PIA sale could pave the way for the privatization of other companies in the coming years.