The Pakistani government has requested an increase in the size and duration of its $6 billion International Monetary Fund (IMF) programme, according to Miftah Ismail, the country's finance minister.
Following negotiations with the IMF in Washington, Ismail made the remarks in a video statement. It occurred after the IMF said that Islamabad has agreed to reduce subsidies in the oil and power sectors ahead of a restart of the IMF's support for the country next month.
"I've sought the fund, and I believe they've agreed to prolong this programme for another year," he explained. "I've also urged that they increase the funding available to Pakistan under this programme from $6 billion to possibly a little bit more."
"When the team arrives in Pakistan in May," he said, "the details would be worked out."
"Based on productive conversations with authorities in Washington, the IMF expects to dispatch a mission to Pakistan in May to resume policy discussions in preparation for the completion of the 7th EFF review," the IMF said in a statement.
This is in addition to the $6 billion in aid that the IMF agreed to grant to Pakistan in 2019. Because of IMF worries about monetary policy and fiscal tightening measures, payment of the money has been slowed multiple times.
The IMF further stated that the Pakistani government has requested an extension of the EFF agreement until June 2023 after the Washington discussions decided to eliminate the subsidies.
Pakistan will provide more than $2 billion in subsidies to the oil and power sectors from April to June.
The IMF had previously questioned how the government could afford that without incurring a large budget imbalance, according to former finance minister Shaukat Tarin.
Pakistan would get more than $900 million if the IMF review is approved, which will also open the door to more external finance.
The South Asian nation is in desperate need of external funds, with a worsening current account and foreign reserves as low as $10.8 billion.
The new Pakistani government, which took over from ousted Prime Minister Imran Khan last month, said it was facing significant economic hurdles, including the prospect of GDP growth slowing and double-digit inflation, which it blames on the previous administration's mismanagement.
Before heading for Washington, Finance Minister Ismail stressed that in order to restart the IMF programme, Islamabad would decrease both its regular spending and its support for development projects.