Pakistan clinches last-gasp $3 billion IMF bailout

pakistan-clinches-last-gasp-$3-billion-imf-bailout
Pakistan clinches last-gasp $3 billion IMF bailout

Pakistan has secured a $3 billion short-term financial package from the International Monetary Fund (IMF), providing much-needed relief to the country’s economy on the brink of default. The deal, subject to approval by the IMF board in July, comes as the current IMF agreement is set to expire. The nine-month standby arrangement offers relief to Pakistan’s acute balance of payments crisis. Prime Minister Shehbaz Sharif believes it will put Pakistan on the path of sustainable economic growth. Without this bailout, Pakistan’s economic crisis could have led to a debt default. The deal was reached after extensive meetings between Sharif and IMF head Kristalina Georgieva. Pakistan will receive formal documents on the deal later today, and Finance Minister Ishaq Dar is confident it will be signed and returned promptly. The new deal will disburse an upfront amount of $1.1 billion after the IMF board’s meeting in July. Pakistan aims to boost its foreign exchange reserves to $15 billion by the end of July. The announcement of the deal has led to an increase in Pakistan’s sovereign dollar bonds. The $3 billion short-term funding from the IMF is higher than expected and will replace the remaining $2.5 billion from a previous agreement. Analysts believe this new program will restore investor confidence and unlock other bilateral and multilateral financing. The IMF emphasizes the need for policy implementation, particularly in the energy sector, where it expects a rise in electricity prices. Pakistan has already taken measures demanded by the IMF, including revising its budget and raising the policy rate. These adjustments have contributed to high inflation in the country. The IMF stresses the importance of executing the budget as planned and resisting un-budgeted spending or tax exemptions. Overall, this financial package from the IMF provides Pakistan with a much-needed lifeline to address its economic challenges and pave the way for sustainable growth.

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