Citi sees new $8bn IMF loan deal by July

May 14, 2024 (MLN): Wall Street bank Citi expects Pakistan to reach an agreement with the International Monetary Fund (IMF) for a new four-year program of up to $8 billion by end-July, and recommends going long on the country’s 2027 international bond, as Reuters reported.

Pakistan last month completed a short-term $3bn Stand-By Arrangement but Islamabad has stressed the need for a fresh, longer term program.

“While longer-term challenges pertain, we see several positive catalysts supporting the Eurobonds,” Nikola Apostolov at Citi wrote in a note to clients.

“First, a larger and longer IMF EFF (Extended Fund Facility) program could be finalised by July – possibly a $7-8bn 4-year program and secondly and a possible inflow of Saudi investments,” Apostolov said after a team from Citi visited Pakistan and met policymakers, including Finance Minister Muhammad Aurangzeb.

Citi said it expected Pakistan’s international 2027 bond to offer a sweet spot to investors with sufficient liquidity and large upside as risks of default dissipate further.

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