- Title: Pakistan aims to agree outline of new IMF loan in May - Finance Minister
- Date: 19th April 2024
- Summary: WASHINGTON, D.C., UNITED STATES (APRIL 18, 2024)(REUTERS) PAKISTAN'S FINANCE MINISTER, MUHAMMAD AURANGZEB SEATED DURING INTERVIEW (SOUNDBITE)(English) PAKISTAN'S FINANCE MINISTER, MUHAMMAD AURANGZEB, SAYING: "So the discussion that we've had with the fund this week is our request to have a larger and a longer facility under the IMF program with really two things in mind. One is that we want to bring permanence in this macroeconomic stability. And the second is we require time and an umbrella under which we execute structural reforms." AURANGZEB DURING INTERVIEW (SOUNDBITE)(English) PAKISTAN'S FINANCE MINISTER, MUHAMMAD AURANGZEB, SAYING: "At this point in time the only thing I would say is that we need at least a three year time period, at least, to execute the structural reforms that I've just mentioned in terms of the quantum and the size of the program. This is premature for me to mention that we are expecting the the IMF mission to be in Islamabad around the middle of May, and that's where some of these contours will start developing." AURANGZEB DURING INTERVIEW (SOUNDBITE)(English)PAKISTAN'S FINANCE MINISTER, MUHAMMAD AURANGZEB, SAYING: "What we want to do is to put the sequencing in place, to have the IMF in place in the first place, and then indeed make a request for the Climate Resilience Facility. The reason I'm saying we want to sequence it is because that money that has to be used for very specific projects for which we will need monitoring and reporting on that basis. And for that we actually need to do the homework. But in terms of the intention, yes, we do have the intention to come back to fund for that request." AURANGZEB DURING INTERVIEW (SOUNDBITE)(English)PAKISTAN'S FINANCE MINISTER, MUHAMMAD AURANGZEB, SAYING: "You know, Pakistan is not a country which is, you know, big on emissions, but it's really adaptation and especially around rehabilitation, reconstruction and everything else that's going on. These are large numbers and of course it's a multi-year journey, but we need to start from somewhere." AURANGZEB DURING INTERVIEW (SOUNDBITE)(English)PAKISTAN'S FINANCE MINISTER, MUHAMMAD AURANGZEB, SAYING: "So bulk of our debt is multilaterals, where we have just talked about, you know, fresh inflows which are coming in to replenish what the existing facilities are. And then we have bilat. And as far as the bilat stuff is concerned. Bulk of this, including the China debt, is being rolled over. So in that sense, I think we are in good shape. And, you know, I don't see a big issue neither during this fiscal year nor during next fiscal year, because we need to repay roughly 20 to $25 billion every single year." AURANGZEB DURING INTERVIEW (SOUNDBITE)(English)PAKISTAN'S FINANCE MINISTER, MUHAMMAD AURANGZEB, SAYING: "I see a lot of opportunity to actually prioritize this with the World Bank Group. And not only from the bank, but also through IFC. And then at some point in time, once our ratings are better to also access international capital markets for green bonds." AURANGZEB DURING INTERVIEW (SOUNDBITE)(English)PAKISTAN'S FINANCE MINISTER, MUHAMMAD AURANGZEB, SAYING: "As you know, the country actually did the inaugural green bond and that was for a parastatal, a public utility. And that was a few years back. You know, at that time, the issuance size was $500 million, but it was six times oversubscribed. So the investor appetite is there. But now coming back to your question, I think during the next fiscal year, it will probably be challenging because we have to come back into a certain rating environment. We have also initiated that discussion with the rating agencies that keeps since this morning and we are going to be talking to other rating agencies just to show our progress and the fact that we make further progress with them and get rerated during the during next fiscal year. But in all likelihood, any international capital market issuance is probably going to be 25, 26 fiscal year." AURANGZEB DURING INTERVIEW
- Embargoed: 3rd May 2024 07:00
- Keywords: IMF Pakistan Worldbank china debt economy
- Location: WASHINGTON, D.C., UNITED STATES
- City: WASHINGTON, D.C., UNITED STATES
- Country: US
- Topics: North America,Government/Politics,International Trade
- Reuters ID: LVA001632819042024RP1
- Aspect Ratio: 16:9
- Story Text:Pakistan hopes to agree the contours of a new International Monetary Fund loan in May, Finance Minister Muhammad Aurangzeb told Reuters, and has kicked off talks with ratings agencies to lay the groundwork for a return to international debt markets.
The country's current $3 billion arrangement with the fund runs out in late April and the government is seeking a longer and bigger loan to help bring permanence to macroeconomic stability as well as an umbrella under which the country can execute much needed structural reforms, the minister said.
"We expect the IMF mission to be in Islamabad around the middle of May - and that is when some of these contour will start developing," said Aurangzeb, who met with the Fund's Managing Director Kristalina Georgieva on Wednesday (April 17) during the International Monetary Fund and World Bank Spring Meetings.
He declined to outline what size programme the government hoped to secure, though Pakistan is expected to seek at least $6 billion. Aurangzeb added that once the IMF loan was agreed, Pakistan would also request additional financing from the Fund under the Resilience and Sustainability Trust.
The struggling South Asian nation had managed to accumulate FX reserves in recent months and was on track for its war chest to hit $10 billion - or roughly two months import cover - by end-June.
The debt situation also looked more benign, Aurangzeb said.
"The bulk of our bilateral debt - including our China debt - is being rolled over, so in that sense I think we are in good shape and I don't see a big issue during this fiscal year nor next fiscal year, cause we need to repay roughly $25 billion dollars every fiscal year."
Pakistan also hopes to come back to international capital markets, possibly with a green bond. However, there was some more work to be done before, said Aurangzeb.
"We have to come back into a certain ratings environment," he said, having kicked off talks with ratings agencies , adding the government was hoping to get an improvement in its sovereign rating in the next fiscal year.
"In all likelihood, any international capital markets issuance will likely be in the 2025/2026 fiscal year."
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