Pakistan seals $3 Billion lifeline: IMF deal offers hope for economic resurgence
Pakistan has reached a staff-level agreement with the IMF for a $3 billion bailout package, providing temporary relief for its foreign debt crisis. The deal is pending approval from the IMF's executive board by mid-July.
Cash-strapped Pakistan has reached a staff-level agreement with the Washington-based financial body International Monetary Fund (IMF) for a crucial bailout package that could lift the South Asian nation out of the economic crisis.
The country has got temporary relief for its ballooning foreign debt with a new stand-by arrangement worth $3 billion announced by the IMF in Washington on Thursday, according to the news agency AFP.
In an official statement, IMF official Nathan Porter said, “I am pleased to announce that the IMF team has reached a staff-level agreement with the Pakistani authorities on a nine-month standby arrangement in the amount of SDR2,250 million (about $3 billion).”
He said that the deal will need to be approved by the IMF's executive board by mid-July, Reuters reported.
Pakistan was racing against time to unlock $1.1 billion under the IMF's ninth review of a $6.5-billion Extended Fund Facility agreed upon in 2019. The program was due to expire on June 30.
The South Asian country has earlier cleared eight of the 11 listed program reviews, with the ninth review pending since November last year. The delay was already the longest since at least 2008.
The ninth review had been stalled due to differences between the fund and Islamabad over policy actions, including external financing needs and a budget that meets program goals.
Pakistan failed to meet IMF expectations when it presented the initial draft of the budget 2023-24 in parliament earlier this month. However, it hurriedly revised the draft to introduce new taxes and expenditure cuts.
On Monday, the country's central bank also hiked the key rate by 100 basis points in an emergency meeting, barely two weeks after keeping the rate unchanged in a scheduled meeting.
The government has earmarked $2.5 billion in external receipts from the IMF in its federal budget for FY24. Pakistan needs upwards of $22 billion to service external debt, make interest payments, and finance its current account for FY24. At $3.5 billion, reserves are at a critical level, enough to cover barely one month of controlled imports.
A successful deal with the IMF could also help unlock credit from other financiers who are looking for a clean bill of health from the IMF for the ailing $350 billion economy.
(With inputs from agencies)
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Business NewsNewsWorldPakistan seals $3 Billion lifeline: IMF deal offers hope for economic resurgence
First Published:30 Jun 2023, 10:30 AM IST
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