International Monetary Fund (IMF) has agreed in principle to extend the stalled bailout program of Pakistan by up to one year with an increase of $2 billion to the total loan size, told Federal Minister for Finance Miftah Ismail on Sunday.
“We have asked the IMF to extend the EFF from three to four years,” Ismail said while talking to a group of journalists at the Pakistani embassy in Washington.
He is currently in America to attend the 2022 spring meetings of the IMF and the World Bank Group, told a news conference at the Pakistan embassy.
“So, we are getting this program extended for one year,” he continued. “They [the IMF officials] were positive and disposed and this [understanding] will probably be added to the staff agreement.”
The minister added that he had checked Pakistan’s remaining quota related to the IMF’s special drawing rights (SDR), concluding that it amounted to $2 billion.
“We have also requested the IMF to increase [the overall loan program] by $2 billion,” he said.
The size of the loan would be increased from the existing $6 billion to $8 billion – a net addition of $2 billion, a senior government official requesting anonymity said.
The IMF is expected to issue a statement on Monday (today) in this regard.
Original IMF Loan program
Initially, in July 2019, the IMF had agreed to provide $6 billion to Pakistan under its Extended Fund Facility (EFF).
Till now, the fund has disbursed $3 billion to the country, however, the next portion of the facility will only be released after the completion of the seventh review which was held up after the country’s previous government deviated from the program objectives by offering a relief package of about $1.7 billion amid rising inflation.
Since the program remained stalled for most of the time as $3 billion remained undisbursed.
IMF’s Statement
IMF issued a statement on Sunday, saying it held “productive meetings” with the Pakistani finance minister and other members of his delegation.
“We agreed that prompt action is needed to reverse the unfunded subsidies which have slowed discussions for the 7th review,” said Nathan Porter, the IMF mission chief for Pakistan. “Based on the constructive discussions with the authorities in Washington, the IMF expects to field a mission to Pakistan in May to resume discussions over policies for completing the 7th EFF review.”