Finance minister quells 'noise' casting doubts on IMF deal approval

ISLAMABAD: Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, on Friday voiced hope that "the International Monetary Fund (IMF) will approve the staff-level agreement next month," quelling the naysayers' doubts.

Pakistan and the IMF reached an agreement on the 37-month loan programme in July. The IMF said the programme was subject to approval from its executive board and obtaining "timely confirmation of necessary financing assurances from Pakistan's development and bilateral partners".

"Just like in the past, there is unnecessary noise about the staff-level agreement not being approved, but we are hopeful that the IMF board will give its approval in September," Aurangzeb stated in an exclusive interview with Geo News.

Replying to a question, the top financial manager said that discussions with commercial banks regarding the provision of funds had been productive, and the improved ratings from international agencies had led to a favourable response from commercial banks.

“Last week, the talks with the Saudi Finance Minister were also positive, while the responses from China, Saudi Arabia, and the United Arab Emirates have also been encouraging,” Aurangzeb said, adding, “Our friendly countries will take the IMF into confidence through their executive directors.”

According to the finance czar, Pakistan requires external financing of $3 billion over the 37-month IMF programme, with $2 billion needed this year alone.

"There was noise then, too, that the IMF would not sanction it, and similar clamour was being raised about the SBA (Stand-By Arrangement)” he said.

“Like in the past, this time as well, the IMF board will greenlight the programme, hopefully in September. We are in discussions with the international lender every other day."

To another query, the finance minister said the government was determined to collect taxes from traders.

"We are determined to collect taxes from traders and provide facilities in return. We have taken all stakeholders into confidence on this matter and will continue to do so," Aurangzeb emphasised.

On Wednesday, Aurangzeb also told Reuters that Pakistan was making good progress with the IMF and hopes to get board approval in September for a new $7 billion loan programme.

"We are making good progress with IMF for Board approval in September," said Aurangzeb in a text message to Reuters.

Pakistan is in talks with Saudi Arabia, the United Arab Emirates and China to meet gross financing needs under the IMF programme, Aurangzeb said in July following a trip to China to seek energy sector debt reprofiling.

Rollovers or disbursements on loans from Pakistan's long-time allies, in addition to financing from the IMF, have helped Pakistan meet its external financing needs in the past.

During an analyst briefing following the central bank's decision in July to cut rates by 100 bps, the central bank chief said he expected rollovers of $16.3 billion in the fiscal year to June 2025 - more than half of Pakistan's $26.2 billion external financing requirement.