IMF-Pakistan reach staff-level agreement to unlock $1.1 billion hours after talks

IMF and Pakistan have reached a staff-level agreement, hours after the talks, to unlock $1.1 billion from a $3bn bailout package the indebted country needed to avert a sovereign default.

The second and final review under Pakistan’s Stand-By Arrangement is subject to the approval of the IMF’s Executive Board.

Upon approval, Pakistan will have access to SDR 828 million (around US$1.1 billion).

International Monetary Fund in a statement confirmed that talks with Pakistan have been concluded leading to a staff-level agreement.

“The IMF team has reached a staff-level agreement with the Pakistani authorities on the second and final review of Pakistan’s stabilization program supported by the IMF’s US$3 billion,” Nathan Porter, who led the IMF delegation, said in a statement.

The statement added that the agreement would be subject to approval by the IMF’s executive board after which the SBA’s final tranche worth $1.1 billion will be released.

IMF also said that Pakistan’s economic situation has improved over the course of the reviews, particularly with help from firendly countries.

“Pakistan’s economic and financial position has improved in the months since the first review, with growth and confidence continuing to recover on the back of prudent policy management and the resumption of inflows from multilateral and bilateral partners,” IMF said.

According to the IMF’s statement, the economic growth would remain ‘modest’ this year and inflation would also remain above target.

IMF also confirmed that Pakistan is interested in securing a medium-term fund facility.

“The authorities also expressed interest in a successor medium-term Fund-supported program to permanently resolve Pakistan’s fiscal and external sustainability weaknesses, strengthen its economic recovery, and lay the foundations for strong, sustainable, and inclusive growth,” IMF said.

The monetary fund added that when talks about a longer deal do take place, they are likely to be centered around strengthening public finances, restoring the energy sector’s viability, returning inflation to target, a more transparent flexible FX market, and promoting private-led activity