IMF Says Making Progress on Pakistan Review, New Climate Loan

(Bloomberg) -- The head of the International Monetary Fund’s mission to Pakistan said the lender and the government have made progress toward releasing the next $1 billion tranche under its current program as well as agreeing to a new loan for climate-related action.

“Program implementation has been strong, and the discussions have made considerable progress in several areas,” the mission chief, Nathan Porter, said in a statement Saturday after his team visited Islamad and Karachi from Feb. 24 to March 14. 

“Progress has also been made in discussions on the authorities’ climate reform agenda, which aims to reduce vulnerabilities from natural disasters-related risks,” he added. 

Pakistan will be on track to receive the second $1 billion installment of the $7 billion loan package it secured last year once the fund and the government reach a so-called staff-level agreement. 

Porter said discussions will continue virtually “over the coming days,” without providing further guidance on when an agreement could be reached. 

IMF financing has been crucial in helping the country recover from a dollar shortage that brought the South Asian nation to the brink of an economic collapse. 

To meet the demands of the loan agreement, the government of Prime Minister Shehbaz Sharif has taken several ambitious steps, including approving a law to tax agricultural income and attempting to sell a stake in state-owned Pakistan International Airlines. 

In the past months, foreign exchange reserves have risen, while inflation has cooled, giving the country’s central bank room to support economic growth. Both Moody’s and Fitch upgraded Pakistan’s credit ratings last year.

--With assistance from Ramsey Al-Rikabi.

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