The International Monetary Fund (IMF) has predicted an increase in Pakistan’s trade deficit during the next fiscal year, sources say, as Finance Minister Muhammad Aurangzeb is set to present the 2024-25 budget next week. Pakistan will see the trade deficit jumping by $4.165 billion in FY25, says the Washington-based lender at a time when two sides held talks in Islamabad for another IMF programme.
Although the dialogue did not produce a staff-level agreement, the IMF noted that a significant progress had been made towards reaching a deal for an Extended Fund Facility (EFF). The statement was issued after an IMF team, led by mission chief Nathan Porter, concluded discussions with the authorities after arriving in Pakistan on May 13. “The mission and the authorities will continue policy discussions virtually over the coming days aiming to finalise discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan’s bilateral and multilateral partners,” Porter said. Pakistan is likely to seek at least $6b under the new programme and request additional financing from the IMF under the Resilience and Sustainability Trust, which covers climate funding. Ahead of the discussions, the IMF had warned that downside risks for the Pakistani economy remained exceptionally high.
