The International Monetary Fund (IMF) has reached a staff-level agreement with Pakistan on the first review of a $3 billion bailout, where the country will receive $700 million after approval from the Fund’s Executive Board, the organisation said on Wednesday.
In June, the IMF executive board had approved the much-needed nine-month standby arrangement (SBA) with Pakistan “to support its economic stabilisation programme”. The approval had allowed for an immediate disbursement of $1.2bn, with the rest to be phased over the programme’s duration — subject to two quarterly reviews. The IMF’s technical staff had initiated the first evaluation of the short-term loan agreement on Nov 2, which concluded on Nov 10.
In a statement, the Fund said that a team led by Nathan Porter was in Islamabad to hold discussions on the first review of the SBA.
“The IMF team has reached a staff-level agreement with the Pakistani authorities on the first review of their stabilisation programme supported by the IMF’s $3 billion SBA,” Porter said.
“The agreement is subject to approval of the IMF’s Executive Board. Upon approval, around $700m will become available bringing total disbursements under the programme to almost $1.9bn,” he said.
“Anchored by the stabilisation policies under the SBA, a nascent recovery is underway, buoyed by international partners’ support and signs of improved confidence,” Porter said.
He said that the steadfast execution of the FY24 budget, continued adjustment of energy prices, and renewed flows into the foreign exchange market had lessened fiscal and external pressures.
“Inflation is expected to decline over the coming months amid receding supply constraints and modest demand. However, Pakistan remains susceptible to significant external risks, including the intensification of geopolitical tensions, resurgent commodity prices, and the further tightening in global financial conditions. Efforts to build resilience need to continue,” Porter said.
The IMF mission chief said that strengthening macroeconomic sustainability and laying the conditions for balanced growth were key priorities under the SBA. The statement by the IMF was released hours after Porter and IMF Resident Representative for Pakistan Esther Perez Tuiz called on interim Prime Minister Anwaarul Haq Kakar. A statement issued by the Prime Minister’s Office said the two apprised Kakar about the “status of the negotiations held at the technical levels with the team of government of Pakistan under the first review of the SBA”.
According to the PMO, Porter acknowledged the efforts made by the government in meeting the various quarterly targets. Porter said that the efforts had resulted in the “positive conclusion of the technical-level talks”. He said that both teams had extensive talks on various aspects of the SBA.
