• Aurangzeb says discussions on new package to progress by second week of May
• Stresses importance of maintaining balanced ties with US, China
• State Dept says it supports efforts to manage Pakistan’s debt burden

WASHINGTON: Fin­a­nce Minister Muhammad Aurangzeb has said that Pakistan requires up to three years to implement some of the structural cha­nges prescribed by the Int­ernational Monetary Fund (IMF) to alleviate the country’s ongoing financial struggles and reduce reliance on bailouts.

The minister, who is currently in Washington to attend the annual spring meetings of the IMF and the World Bank Group, also met the chiefs of both institutions on Tuesday and discussed with them the possibility of a new, long-term Extended Fund Facility (EFF) with the IMF.

In an interview with AFP, Mr Aurangzeb disclosed that Pakistan is in talks for a substantial multi-year IMF loan programme valued at “billions” of dollars. Previous reports indicated Pakis­tan’s interest in a $6bn-$8bn EFF package spanning three years to bolster its economic stability.

“By the time we get to the second or third week of May, I do think we’ll start getting into the contours of discussions” about a new programme, he said.

The IMF’s Extended Fund Facility provides financial assistance to countries facing serious medium-term balance of payments problems due to structural weaknesses that require time to address.

In his Tuesday meetings, the finance minister addressed reforms proposed by the IMF to meet targets agreed upon during negotiations for the current programmes, expiring later this month.

In one of these meetings, Mr Aurangzeb briefed Hela Cheikhrouhou of the International Finance Corporation (IFC) on ongoing reforms in Pakistan’s taxation, energy and privatisation sectors.

He also expressed Pakistan’s commitment to collaborate closely with the IFC “in the priority areas of securitisation of remittances, mining, airport management and capacity-building,” as his team stated.

In interviews with various US and international media outlets, the finance minister expressed optimism about market confidence, which spurred him to initiate discussions with the IMF for a larger and extended programme.

However, an IMF spokesperson emphasised the organisation’s current commitment to completing the ongoing Stand-by Agreement programme. The Fund, he said, would engage in preliminary discussions for a successor programme following its conclusion.

The finance minister also stressed the importance of striking a balanced approach in Pakistan’s trading relationships with the United States and China amid their trade war. He hoped Pakistan could sustain positive relations with both countries despite their rivalry.

The minister also emphasised the government’s dedication to carrying forward the structural reform programme initiated by the previous administration.

As part of the programme, Pakistan is privatising underperforming state-owned enterprises (SOEs), including Pakistan International Airlines, the national flag carrier.

Mr Aurangzeb reiterated the government’s objective to go ahead with privatisation and accomplish it by the end of June.

He added that if the privatisation of Pakistan International Airlines is successful, other state-owned enterprises could undergo a similar process.

Meeting with Saudi minister

On Tuesday, Finance Minister Aurangzeb also met his Saudi counterpart, Mohammad Al-Jadaan.

A statement released by the Pakistani embassy conveyed that the Saudi finance minister reaffirmed support for Pakistan’s economic growth, including through investments. Both sides agreed to enhance bilateral cooperation and broaden the partnership across various sectors.

At the IMF headquarters, Mr Aurangzeb participated in the G-24 finance ministers and central bank governors’ meeting. He acknowledged the support the IMF and the World Bank provided to Pakistan.

The minister’s team said that he “talked about reforms in the areas of taxation, energy, privatisation, and digitalisation”.

He also “underlined the need to bring in more private sector investment and leverage the Adaptation Fund to help the country deal with adverse impacts of climate change”.

US State Dept

Meanwhile, the US State Department welcomed last month’s announcement that the IMF has reached a staff-level agreement with Pakistan.

“We understand that the Pakistani Minister of Finance is in town here in Washington for meetings at the IMF and World Bank. Pakistan has made progress in stabilising its economy, and we support its efforts to manage its daunting debt burden,” State Department spokesman Matthew Miller said.

“We encourage the government to prioritise and expand economic reforms to address its economic challenges. Our support for the country’s economic success is unwavering, and we will continue to engage with Pakistan through technical agreements as well as through our trade and investment ties, all of which are priorities of our bilateral relationship,” he said.

Published in Dawn, April 17th, 2024