Finance Minister Confident of Securing $1.2 Billion IMF Staff-Level Agreement This Week

Pakistan is optimistic about clinching a staff-level agreement (SLA) with the International Monetary Fund (IMF) this week, a breakthrough that could unlock $1.2 billion in new funding and reinforce the country’s path to macroeconomic stability. Finance Minister Muhammad Aurangzeb, speaking to Reuters at the IMF-World Bank annual meetings in Washington, described recent talks with the IMF as “very constructive.” He said the government is hopeful the SLA, covering the second review of the $7 billion Extended Fund Facility (EFF) and the first review of a $1.4 billion Resilience and Sustainability Facility (RSF), will be finalized in the coming days. The IMF mission left Pakistan last week without a deal, but follow-up discussions have continued to resolve outstanding issues on quantitative and structural reforms. Once the IMF’s Executive Board approves the SLA, Pakistan will receive a $1.24 billion tranche, a critical injection as the country manages inflation, currency volatility, and fiscal pressures. The IMF program, signed in September 2024, has been pivotal in stabilizing Pakistan’s $370 billion economy after a period of record inflation, a tumbling rupee, and widening external deficits. Looking ahead, Aurangzeb said Pakistan plans to re-enter international markets with the launch of its first-ever green Panda bond, denominated in Chinese yuan, before the end of 2025. The government also aims to issue a bond of over $1 billion next year, with options open for currency and structure, including euro, dollar, and Islamic Sukuk. On privatization, Aurangzeb expects momentum to pick up before June 2026, after a slow year. The government is preparing to sell three power distribution companies and Pakistan International Airlines (PIA), which would mark the country’s first major privatization in nearly 20 years. PIA’s recent recovery of routes to Europe and the UK has made it more attractive to investors, with interest reportedly coming from five local groups, including Airblue, Lucky Cement, Fauji Fertilizer, and Arif Habib Group. Final bids are expected later this year, after a failed attempt in 2024.