Pakistan has repaid $1 billion in Eurobonds as a scheduled payment ahead of seeking a long-term bailout from the International Monetary Fund (IMF). The bond, launched in 2014 and repaid on Friday, was maturing this month.

“The payment was made to the agent bank for onward distribution to the bond holders,” the State Bank of Pakistan said in a statement.

Pakistan has been struggling with a balance of payments crisis, record inflation and steep currency devaluation since an IMF standby arrangement averted a sovereign default. Finance Minister Muhammad Aurangzeb is due to leave on Sunday for Washington to attend the IMF-World Bank spring meeting, where he will start negotiations for Pakistan’s 24th long-term IMF bailout.

Aurangzeb briefed Prime Minister Shehbaz Sharif about the new IMF programme on Friday, the government said in a statement. The IMF standby arrangement of $3 billion Islamabad secured last summer expired on Thursday. Its final tranche of $1.1 billion is expected to be released after the multilateral lender’s board meets later this month.

The two sides have spoken in recent weeks about negotiating the longer-term bailout to continue with necessary policy reforms to rein in deficits, build up reserves and manage soaring debt servicing. Pakistan is in discussions with the IMF for a potential follow-up programme, the IMF chief Kristalina Georgieva said on Thursday.

The World Bank said recently that Pakistan is implementing an ambitious, credible and clearly communicated economic reform plan critical for robust recovery and poverty reduction.

Pakistan’s economy is expected to grow by only 1.8 per cent in the current fiscal year ending June 2024. According to the World Bank’s latest Pakistan Development Update titled Fiscal Impact of Federal State-Owned Enterprises, this subdued recovery reflects tight monetary and fiscal policy, continued import management measures aimed at preserving scarce foreign reserves, and muted economic activity amid weak confidence.

Agencies