IMF and Pakistan reach $3 billion deal

The economy has been stricken by a balance-of-payments crisis as it attempts to service crippling external debt, while months of political chaos have scared off foreign investment.

Inflation has rocketed, the rupee has reached a record low against the dollar, and the country is struggling to afford imports, causing a severe decline in industrial output.

“I am pleased to announce that the IMF team has reached a staff-level agreement with the Pakistani authorities on a nine-month standby arrangement in the amount of SDR 2,250 million (about $3 billion),” IMF official Nathan Porter said in a statement late Thursday.

The deal will need to be approved by the IMF’s executive board and will be considered by mid-July, Porter said.

The figure represents 111 percent of Pakistan’s IMF quota.

Pakistan’s negotiations with the IMF for the last tranche of a $6.5 billion bailout package, agreed in 2019, stalled last November, with the government making last-minute changes to the national budget to try and meet the deal’s requirements.

That package expires on Friday, and the new agreement builds on the IMF’s efforts under the previous deal, Porter said.

Pakistan Prime Minister Shehbaz Sharif welcomed the deal but said it was not a silver bullet.

“This is not a moment of pride, but a moment to think over the reality. Do nations survive on loans? Let us pray that this is the last time that we have secured a loan from IMF and that we should not go to the IMF again,” he told media after the deal was signed in Lahore.

Sharif described his meetings with IMF Managing Director Kristalina Georgieva in Paris last week as a “turning point” in a series of recent discussions with the world body.

Source: Ahram Online