IMF extents deal with Pak to revive $6bn bailout

Wednesday 20th July 2022 06:44 EDT

Islamabad: The International Monetary Fund said it had reached an initial agreement with Pakistan to revive a $6 billion bailout package for the underprivileged Islamic nation, which has been facing a serious economic crisis since last year.

Pakistan and the IMF originally signed the agreement in 2019. But the release of a slightly over $1 billion tranche had been put on hold since earlier this year. That’s when the IMF expressed concern about Pakistan’s compliance with the conditions of the bailout under former Prime Minister Imran Khan. The parliament ousted him through a no-confidence vote in April.

Under newly elected PM Shahbaz Sharif, the government has been in talks with the IMF since May, to avoid a default like Sri Lanka’s. Moreover he tweeted, “The agreement with the Fund has set the stage to bring the country out of economic difficulties."

In current weeks, Pakistan carry out additional taxes and reduced subsidies on fuel, electricity and natural gas to meet IMF’s conditions. That made the government highly unpopular, but Sharif says the actions were necessary.

In a statement, the fund said it has “reached a staff-level agreement with the Pakistan authorities.” It also added that the deal is “subject to approval by the IMF’s Executive Board.” It said Pakistan will be eligible to receive a critical instalment of about $1. 17 billion. The IMF will also raise the value of the bailout from $6 billion to $7 billion subject to approval from the executive board, which is usually considered a formality.

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