Pakistan faces up to $5 billion financing gap even after IMF program

Pakistan will face a financing gap of up to $5 billion even after entering a new loan program with the International Monetary Fund (IMF), Finance Minister Muhammad Aurangzeb said on Tuesday.

Talking to the media after attending a Senate committee meeting, Aurangzeb said the external financing gap was "not big" and the government would make efforts to minimize it.

He shared that foreign banks had offered help with bridging the gap but the government would not take loans that had higher interest rates.

Pakistan reached a staff-level agreement with the IMF for a 37-month-long loan program that would give $7 billion to the country. The agreement is subject to approval by the international lender's Executive Board, which is expected to meet by the end of the year, according to the finance minister.

In response to a question about Independent Power Producers, Aurangzeb said it was crucial to hire an advisor in China to settle the payments issue. However, conversion of IPPs from imported to local coal would take at least three years.

The government's agreements with the IPPs have come under severe criticism in recent months amid skyrocketing electricity bills, with opposition parties and trade and industry associations demanding the government shut them down or renegotiate their contracts.