Washington (TDI): Pakistan is expected to finalize a staff-level agreement with the International Monetary Fund (IMF) this week, a crucial step toward securing the next $1.24 billion tranche under its ongoing loan program, according to Finance Minister Muhammad Aurangzeb.
In an interview with Reuters on the sidelines of the IMF and World Bank annual meetings, Aurangzeb said talks with the Fund’s mission, which recently concluded its visit to Pakistan, had been “constructive and forward-looking.”
“The team was here for a couple of weeks. We had very productive discussions around the quantitative and structural benchmarks, and follow-up consultations have been continuing,” he said. “We’re optimistic about concluding the staff-level agreement within the week.”
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The agreement pertains to the second review of Pakistan’s $7 billion Extended Fund Facility (EFF) and the first review of the $1.4 billion Resilience and Sustainability Facility (RSF), both established in 2024 to help the country recover from a severe economic crunch.
Each IMF review, once endorsed by the Fund’s Executive Board, unlocks the next disbursement of funds.
The IMF program, signed in September 2024, played a pivotal role in stabilizing Pakistan’s $370 billion economy, which had been reeling from record inflation, a sharp currency decline, and widening external deficits.
Aurangzeb added that the government plans to issue its first green Panda bond, denominated in Chinese yuan, before the end of the year. He said Islamabad also aims to return to the international capital markets next year with a sovereign bond issuance worth at least $1 billion.
“We’re keeping our options open, whether it’s a Eurobond, dollar bond, Sukuk, or Islamic Sukuk,” he said.
The finance minister also pointed to progress in Pakistan’s long-delayed privatization drive, which is a key component of the government’s broader economic reform and fiscal consolidation plan.
He said the authorities expect stronger momentum this fiscal year after limited progress last year. “Privatization remains an essential part of our economic roadmap,” Aurangzeb noted.
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Among the state-owned enterprises on the privatization list are three power distribution companies and Pakistan International Airlines (PIA). The minister said there has been growing investor interest, particularly after the reopening of PIA’s routes to Europe and the UK.
“This has made PIA a much more attractive proposition for investors,” he said. “We are quite hopeful about receiving qualified bids.”
If completed, the transaction would represent Pakistan’s first major privatization in nearly two decades. A previous effort faltered last year after the government received only one underwhelming offer. This time, however, five domestic business groups, including Airblue, Lucky Cement, Arif Habib Group, and Fauji Fertiliser, have expressed interest. Final bids are expected to be submitted later this year.
