Pakistan and the International Monetary Fund reached a staff-level agreement, on November 15, paving the way for the disbursement of $700 million from a $3 billion bailout fund that the international lender had approved back in July, according to the statement issued by the IMF.
The development will bring total disbursements under the program to almost $1.9 billion.
An IMF mission, led by Nathan Porter, conducted technical- and policy-level talks in Pakistan from November 2-15 to review the government’s progress in meeting the benchmarks set under the standby arrangement agreed upon in July.
Highlighting progress, the IMF stated, “Anchored by the stabilization policies under the SBA, a nascent recovery is underway, buoyed by international partners’ support and signs of improved confidence.”
While acknowledging positive trends, the IMF cautioned that Pakistan faces external risks, including geopolitical tensions, rising commodity prices, and potential tightening in global financial conditions. The organization emphasized the need for continued efforts to enhance resilience.
The mission’s positive outcome signaled a crucial step forward in Pakistan’s economic stability and resilience. Former adviser to the Ministry of Finance Dr Khaqan Hassan Najeeb expressed optimism, stating that the board’s approval would pave the way for unlocking additional funding from other multilateral and bilateral donors.
“That is a good development and a satisfying one for Pakistan indeed,” he said, noting that inflation should steadily decline “is the thought process moving forward”.
The IMF underscored that the agreement reinforces Pakistan’s commitment to fiscal consolidation and energy sector reforms.
The short-term deal aims for a return to a market-determined exchange rate, along with reforms in state-owned enterprises and governance to attract investment, support job creation, and strengthen social assistance.
The $3 billion short-term loan agreement with the IMF was secured by Pakistan in June, averting a looming default threat. In adherence to IMF conditions, the country implemented substantial economic reforms, including increases in electricity and gas tariffs.