Pakistan Requests Additional $2 Billion from IMF
Islamabad, Pakistan – Pakistan is seeking an extra $2 billion from the International Monetary Fund (IMF) to address the severe impacts of climate change. This request will be made by Pakistan’s Finance Minister, Muhammad Aurangzeb, during the annual IMF meetings in Washington, DC, from October 21 to 26. The main ministerial sessions will occur from October 22 to 25.
Delegation and Concerns
Aurangzeb will lead a delegation including the finance secretary, economic affairs secretary, and the State Bank of Pakistan governor. The IMF has previously expressed concerns about Pakistan’s ability to repay its external debt, describing it as “fragile.” Pakistan’s external financing needs are projected to reach $62.6 billion over the next three years under the Extended Fund Facility (EFF) program, increasing to $110.5 billion over five years from 2024 to 2029.
Future Financial Needs
For the current fiscal year, Pakistan’s external funding needs are estimated at $18.813 billion, rising to $20.088 billion in 2025-2026 and $23.714 billion in 2026-2027. Even after the three-year program ends, high financial demands will persist, with $24.625 billion needed in 2027-2028 and $23.235 billion in 2028-2029.
IMF’s Warning
The IMF has warned that Pakistan’s debt repayment ability is at “major risk” and depends heavily on policy implementation and timely external financing. The Fund’s exposure could reach Special Drawing Rights (SDR) 6,816 million by September 2024, which is 336% of Pakistan’s quota. High public debt, low reserves, and sociopolitical factors could threaten policy execution and debt sustainability.
On September 25, the IMF’s Executive Board approved Pakistan’s 37-month EFF agreement, valued at around $7 billion.
Doubts Revealed
Pakistan -: Pakistan is a country located in South Asia, sharing borders with India, Afghanistan, Iran, and China. It has a diverse culture and history.
IMF -: IMF stands for International Monetary Fund. It is an organization of 190 countries that works to promote global economic stability and growth by providing financial assistance and advice to its member countries.
Climate Change Impact -: Climate change impact refers to the effects of changes in the Earth’s climate, such as extreme weather, rising sea levels, and changing rainfall patterns, which can affect people’s lives and the environment.
Finance Minister Muhammad Aurangzeb -: Muhammad Aurangzeb is the Finance Minister of Pakistan, responsible for managing the country’s financial policies and economic affairs.
Washington, DC -: Washington, DC is the capital city of the United States of America. It is where many important government buildings and international organizations, like the IMF, are located.
Debt Repayment Ability -: Debt repayment ability refers to a country’s capacity to pay back the money it has borrowed from other countries or organizations, like the IMF.
External Financing Needs -: External financing needs are the amount of money a country needs to borrow from other countries or international organizations to support its economy and development.
Public Debt -: Public debt is the total amount of money that a government owes to lenders, which can include other countries, organizations, or its own citizens.
Reserves -: Reserves are the amount of money or assets that a country holds to support its economy, often used to stabilize its currency and pay for imports.
