Finance Minister Senator Muhammad Aurangzeb expressed optimism that the International Monetary Fund’s (IMF) board would approve a $7 billion, 37-month Extended Fund Facility (EFF) for Pakistan at its meeting on Wednesday. Speaking at the “High Level Private Sector Dialogue – CPEC-II and the Region” via Zoom, Aurangzeb highlighted the successful conclusion of a 9-month Stand-by Arrangement (SBA) with the IMF and anticipated the approval of the new programme.
“Pakistan successfully concluded a 9-month SBA with IMF and we have its board meeting tomorrow (Wednesday) here in the US. We are very hopeful the board would approve the 37-month $7 billion programme,” he stated.
The IMF and Pakistan had reached an agreement on the loan programme in July, contingent upon approval from the IMF’s executive board and securing necessary financing assurances from Pakistan’s development and bilateral partners.
Aurangzeb emphasized Pakistan’s commitment to structural reforms under the programme, focusing on taxation, the energy sector, state-owned enterprises, and privatisation. “We will stay on course,” he resolved.
Earlier this month, the finance minister had vowed to persist with plans for new taxes on the retail sector despite strike threats, viewing it as essential for securing the IMF loan. “One thing I want to be very clear (about) … This is not going to be taken back,” Aurangzeb asserted, urging wholesalers, distributors, and retailers to contribute to the economy. These taxes, introduced in the June budget, align with ambitious revenue targets to secure the IMF programme, but they have faced public backlash.
At the CPEC dialogue, Aurangzeb thanked China for its support of the fund programme, noting it as Pakistan’s lone standing partner. He reported that Pakistan’s economic improvement, which began in the last fiscal year, continued into the first quarter of the current fiscal year, with stability in the currency and foreign exchange reserves covering two months of imports, and a deceleration in inflation leading to lower policy rates and benefits for the industry.
He also mentioned that the government recently rejected Treasury Bills (T-bills) and Pakistan Investment Bonds (PIBs) to convey that it was no longer desperate to borrow domestically. “If required, the government will borrow domestically on its own terms, signalling the banking sector to lend to the private sector,” he said. However, he welcomed investment inflows in terms of debt and equity, which would bring foreign direct investment (FDI) into the country.
Highlighting the importance of macroeconomic stability, Aurangzeb stated that a foundation had been laid for promoting economic stability. “The China-Pakistan Economic Corridor Phase II is now underway, building on the infrastructure development of Phase I,” he noted. While Phase I focused on establishing corridors and investing in roads, ports, and energy, Phase II aims to monetise this infrastructure despite previous momentum being missed.
“This initiative, dubbed the new silk roads, aims to attract investment partners worldwide. The private sector will drive growth, with the government providing a supportive policy framework,” he explained.
Furthermore, Aurangzeb urged the Saudi Pak and Pak-China Development Financial Institutions (DFIs) to facilitate cross-border investments and corridor development between Pakistan and its brotherly countries. He encouraged them to seize this opportunity, becoming catalysts for business growth and bilateral investment, and serving as levers through which business can be advanced.
