The International Monetary Fund (IMF) has reached a staff-level agreement with Pakistan regarding the final review of a $3 billion bailout. This agreement paves the way for Pakistan to receive $1.1 billion upon approval from the Fund’s Executive Board. The agreement, recognizing Pakistan’s strong program implementation and ongoing reform efforts, aims to transition the country towards a sustainable economic recovery.
Nathan Porter, the IMF mission chief in Pakistan, highlighted the positive developments in Pakistan’s economic and financial position since the first review. He mentioned that growth and confidence are recovering due to prudent policy management and increased inflows from multilateral and bilateral partners. However, Porter cautioned that growth is expected to be modest this year, and inflation remains above target.
The statement emphasized the importance of ongoing policy and reform efforts to address Pakistan’s economic vulnerabilities. The government is committed to broadening the tax base, implementing timely adjustments in power and gas tariffs, and maintaining prudent monetary policy to lower inflation and ensure exchange rate flexibility.
Following the announcement, shares at the Pakistan Stock Exchange (PSX) saw a positive response, climbing up by 374 points.
The agreement comes after Finance Minister Muhammad Aurangzeb and IMF mission chief Nathan Porter led their teams in a concluding session. Last year, the IMF Executive Board approved a nine-month arrangement to support Pakistan’s economic stabilization program, with an immediate disbursement of $1.2 billion and subsequent phased disbursements subject to quarterly reviews.
Looking ahead, Pakistan eyes a longer and larger economic bailout package with the IMF, as indicated by Finance Minister Aurangzeb Khan. The IMF is supportive of formulating a new economic program for Pakistan if requested by the new government.
The next steps include primary ministerial meetings scheduled from April 17 to 19, during which Pakistan will discuss further economic initiatives.
