ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have finally reached a staff-level agreement over the release of $1.17 billion to support the country’s fragile economy, the international money lender revealed Thursday.
“[The] IMF staff and the Pakistani authorities have reached a staff level agreement on policies to complete the combined 7th and 8th reviews of Pakistan’s Extended Fund Facility (EFF),” a statement by the IMF read.
The agreement is subject to approval by the IMF’s executive board.
“Subject to Board approval, about $1,177 million (SDR 894 million) will become available, bringing total disbursements under the program[me] to about $4.2 billion,” it said.
In June, Pakistan and the Fund staff achieved substantial progress to strike a consensus on budget 2022-23 after which the IMF shared a draft Memorandum of Economic and Financial Policies (MEFP).
On June 28, Finance Minister Miftah Ismail had announced that Pakistan had received the MEFP from the IMF for the combined seventh and eighth reviews.
The IMF team, led by Nathan Porter, has finalised discussions for the combined seventh and eight reviews of Pakistan’s economic program supported by an IMF EFF.
The IMF, in its statement, further said that, to support programme implementation and meet the higher financing needs in FY23, as well as catalyse additional financing, the IMF Board will consider an extension of the EFF until end-June 2023 and an augmentation of access by SDR 720 million that will bring the total access under the EFF to about US$7 billion.
“Pakistan is at a challenging economic juncture. A difficult external environment combined with procyclical domestic policies fueled domestic demand to unsustainable levels. The resultant economic overheating led to large fiscal and external deficits in FY22, contributed to rising inflation, and eroded reserve buffers,” the IMF statement read.
The statement from the international money lender further stated that the programme will stabilise the economy of Pakistan and bring policy actions in line with the IMF-supported programme while protecting the vulnerable, policy priorities, which include the following.
