On Tuesday, Reuters reported that the International Monetary Fund (IMF) has announced a staff-level agreement with Pakistan regarding its loan program. This agreement would enable Pakistan to access $1.2 billion after the fund's board grants approval. Specifically, the IMF will disburse $1 billion under its Extended Fund Facility and $200 million under its Resilience and Sustainability Facility. This brings the total disbursements under these two arrangements to approximately $3.3 billion.
Countries participating in IMF lending programs must undergo regular reviews. Successful completion and approval by the fund's executive board lead to the release of subsequent loan tranches. The IMF underscored that Pakistan's economic program, bolstered by the Extended Fund Facility, is reinforcing macroeconomic stability and enhancing market confidence.
In light of recent catastrophic floods, Pakistan has committed to maintaining a suitably tight and data-driven monetary policy and fortifying its climate resilience strategies. Finance Minister Muhammad Aurangzeb had previously mentioned on Tuesday the imminent signing of a preliminary deal with the IMF.
This update followed the departure of an IMF delegation from Pakistan last week without closure on agreements. Additionally, Aurangzeb shared plans for Pakistan's return to capital markets. The government is gearing up to issue its first green bond denominated in Chinese yuan before the year concludes, followed by an international bond of at least $1 billion.
The financial support extended by the IMF in September 2024 proved instrumental in stabilizing Pakistan's mammoth $370 billion economy post a severe financial crisis. The economic turmoil had triggered a sharp decline in the currency value. These recent developments suggest a step towards economic recovery and growth for Pakistan.
(With inputs from IANS)
