In a breakthrough, Pakistan and the International Monetary Fund (IMF) have come to a staff-level agreement over the revival of the Extended Fund Facility (EFF) program. This is a significant development that will help Pakistan in its economic recovery efforts.
A source within the Ministry of Finance has confirmed that an agreement has been reached with the IMF, and an official statement will be released this evening.
“The first tranche is expected to be SDR894 million, equal to $1.2 billion. The program has been extended till July 2023, and total program size increased by $1bn to $7bn,” they said.
Last month, the International Monetary Fund (IMF) issued the seventh and eighth reviews of Pakistan’s economic and financial policies under the Memorandum of Economic and Financial Policies (MEFP).
This was confirmed by Finance Minister Miftah Ismail on his official Twitter handle. The MEFP is a document that contains details regarding striking a staff-level agreement.
In last month, Pakistan showed its 9.5 trillion rupee ($47 billion) budget for 2022-23 with an aim of convincing the IMF to restart its bailout payments. Though the IMF later said that additional measures were needed to make Pakistan’s budget match up with the key objectives of the IMF programme, both sides held several meetings and agreed on the budget and fiscal measures.
At the time of the meeting between Ismail and IMF officials in Washington in April, Pakistan had requested an increase in the size and duration of the programme. To date, only half of the funds from the programme have been disbursed to Pakistan, as the country has struggled to meet its targets.
The last disbursement of funds was in February, and the next tranche was scheduled to follow a review in March. However, the government of ousted prime minister Imran Khan introduced costly fuel price caps, which threw fiscal targets and the programme off track.
Pakistan’s new government has removed the price caps, with fuel prices rising by up to 70% at the pump in a matter of three weeks.