Pakistan Nears IMF Tranche Approval, Aurangzeb Confirms Progress
Finance Minister Muhammad Aurangzeb said Pakistan has fulfilled most conditions set by the International Monetary Fund (IMF), raising hopes for the approval of a USD1.2 billion tranche on May 8. He expressed confidence while addressing the high-level EU-Pakistan Business Forum, where he outlined the country’s improving economic outlook. Read More: https://theboardroompk.com/nepra-scraps-licensing-for-small-solar-systems-under-25-kw/ The minister said the government expects economic growth to reach around 4 percent this fiscal year. He highlighted signs of macroeconomic stability and noted that key financial indicators are gradually improving. Progress on IMF Programme and Economic Stability Aurangzeb confirmed that Pakistan has largely honored the staff-level agreement reached with the IMF on March 27. This progress paves the way for the third review under the Extended Fund Facility and the second review under the Resilience and Sustainability Facility. He stressed that the IMF board’s approval would unlock critical external inflows. These funds will help stabilise the country’s balance of payments. He added that an IMF mission is expected in mid-May to discuss Pakistan’s upcoming budget proposals. The minister also shared that Pakistan has achieved both a primary and overall fiscal surplus. This development signals improved fiscal discipline. He noted that debt servicing costs will likely remain below budgeted levels, creating additional fiscal space for the government. Foreign Reserves and External Accounts Show Improvement Aurangzeb highlighted improvements in external accounts. He projected that foreign exchange reserves could reach USD18 billion by June. He said this growth will occur despite large repayments, including USD3.5 billion to a bilateral partner and USD1.4 billion in Eurobonds. He pointed to strong remittance inflows as a key support factor. Monthly remittances average around USD3.8 billion, providing stability to the external account. Additionally, inflows through Roshan Digital Accounts continue to contribute between USD180 million and USD200 million each month. The minister also noted that rising IT exports are supporting economic growth. He said these sectors are helping diversify Pakistan’s revenue streams. Shift Toward Commercial Borrowing and Global Markets Aurangzeb announced a strategic shift in borrowing policy. The government plans to reduce reliance on bilateral dollar inflows. Instead, it will raise funds through international bonds and commercial loans. He revealed plans to issue Panda bonds, Eurobonds, and Sukuk in the coming months. A USD250 million Panda bond is expected to launch in May. Multilateral lenders, including the Asian Development Bank and the Asian Infrastructure Investment Bank, will back the issuance with guarantees. He said discussions with Chinese authorities have reached the final stage. This move reflects growing international confidence in Pakistan’s economic recovery. Impact of Gulf Conflict and Inflation Pressures The finance minister acknowledged that the ongoing Gulf conflict has impacted Pakistan’s economy. He said energy infrastructure disruptions have increased inflationary pressures, as also projected by the State Bank of Pakistan. He stated that the government is developing scenario modelling to assess risks. These include oil price shocks, freight disruptions, and inflation linked to the regional conflict. Addressing fuel prices, Aurangzeb defended the Petroleum Levy. He said the government had limited options as global fuel prices rose due to geopolitical tensions. Structural Reforms and Policy Measures Aurangzeb emphasised that Pakistan has met key quantitative targets under the IMF programme. He also highlighted progress on structural benchmarks. These efforts strengthen the case for programme continuation. He announced that the Debt Management Office has been restructured. This step aims to improve oversight and efficiency in managing public debt. The minister also revealed that a contributory pension scheme for the Armed Forces will begin from the 2026-27 budget. He said this reform will help manage long-term fiscal liabilities. Government Adopts Whole-of-Government Approach Aurangzeb said the government has managed the initial impact of the Gulf conflict. It is now assessing second- and third-order effects across various sectors. To coordinate responses, authorities have established the National Coordination and Management Council. This body will ensure a unified strategy across government institutions. He concluded that Pakistan’s economic indicators are moving in the right direction. With IMF support and improved financial discipline, the country aims to sustain growth and stability in the coming months.
