ISLAMABAD: In yet another turn that has further eroded chances for revival of the $6.5 billion bailout package, the International Monetary Fund (IMF) has asked Pakistan to now arrange $8 billion in fresh loans to back the external debt repayments during the next seven months. 

According to government sources, the government has yet to comply with the IMF's requirement to obtain its approval on the next budget for the fiscal year 2023–2024, which lessens the likelihood that the 9th review of the Extended Fund Facility (EFF) will be finished as soon as possible.

According to sources, the IMF has increased its demand for extra funding from a previously unmet requirement of $6 billion to $8 billion in order to ensure debt repayments that are due between May and December 2023.

The lender calculated the $8 billion requirement by taking into account all anticipated inflows and outflows for this time frame.

The sources claim that the finance minister told the executive director that only once the IMF announced staff-level agreement and the board approved the ninth review together with the $1.2 billion tranche could the remaining $3 billion be negotiated.

When asked if Pakistan must come up with $8 billion between now and December of this year to meet the requirements for repaying its external debt, the IMF resident representative remained silent.

IMF spokeswoman Julie Kozack said Pakistan needs "significant additional financing" to properly complete the ninth review during a scheduled press briefing on Thursday. She claimed that in addition to having enormous finance needs, the economy was experiencing stagflation and had been hit by a number of shocks, including catastrophic flooding.

According to the IMF spokeswoman, obtaining assurances of "significant additional financing" is necessary before the IMF permits the release of pending bailout funds that Pakistan needs to fix a severe balance of payments issue.

According to sources, the IMF is concentrating more on finding cash to cover Pakistan's repayment of its external debt in order to prevent a default. It no longer places a strong priority on boosting the incredibly low foreign exchange reserves.

Dar added on Thursday that Pakistan, with or without an IMF programme, would not default on any foreign obligations. He claimed that Pakistan had completed all of the IMF's previous requirements, and that the lender now had to sign the contract.

The finance minister said that it was inappropriate to associate default with the IMF deal's postponement.

Whether there is an IMF programme in place or not, he said, Pakistan won't default. He continued by saying that more difficult choices could not be made at this time.

Dar claimed that there were growing fears that Pakistan will stop making its international payments. He claimed that after he clarified the situation after an international rating agency brought up Pakistan's $3.7 billion in external payments due before June 30, the following day, another rating agency claimed that Pakistan would not be able to pay its obligations from July to December.

The State Bank of Pakistan's foreign exchange holdings have decreased to $4.4 billion.

As its financial inflows connected to its debt have nearly dried up as a result of a delay in reaching an agreement with the IMF, the government has been seeking to avert default by putting the brakes on imports.

According to sources, the administration is also reportedly unwilling to comply with the IMF's request for access to a draught of the upcoming year's budget. Senior officials from the finance ministry stated that the IMF's willingness to combine the 10th review and provide a funding tranche of more than $1.2 billion is a need for sharing the draught budget.

Despite a nine-month extension of the IMF project, $2.6 billion of the $6.5 billion remains unpaid.