The International Monetary Fund (IMF) and financially troubled Pakistan reached an agreement Tuesday on reforms that pave the way for $ 500 million to be paid out as part of the revival of a stalled bailout program, the Treasury Department said.
The IMF had agreed in 2019 to provide Pakistan with US $ 6 billion as part of a 39-month EFF (Extended Fund Facility) agreement that was disrupted last year due to the COVID-19 pandemic.
Financial advisor Dr. Abdul Hafeez Shaikh announced on social media that the agreement was reached at a stand-level meeting between the two sides.
“I want to announce that the Pakistani government has a staff-level agreement with the IMF. Addressing the challenges posed by the pandemic will require a concerted effort,” he tweeted.
The adviser described it as a “good development for Pakistan” and thanked Prime Minister Imran Khan and IMF staff for their support.
An IMF team, led by Ernesto Ramirez Rigo, held virtual meetings with the Pakistani authorities and, according to a statement by the Fund, reached a staff-level agreement on the second to fifth reviews of the authorities’ reform program.
The agreement strikes the right balance between supporting the economy, ensuring debt sustainability and promoting structural reforms.
“By the time the board approves it, completing the reviews would free around $ 500 million,” the IMF said.
The Pakistani authorities are also committed to ambitious policies and structural reforms to strengthen economic resilience, drive sustainable growth and meet the EFF’s medium-term goals.
The fiscal support program is key for Pakistan to gain international confidence in its economy, which is struggling to get out of the effects of the pandemic.
Despite a suspension of the bailout, the IMF provided Pakistan with $ 1.4 billion in emergency funding to help mitigate the economic impact of COVID-19.
For the first time in 68 years, the Pakistani economy contracted in the past fiscal year, down 0.38 percent due to the negative effects of the COVID-19 pandemic combined with the already weak financial situation before the deadly infection hit the country.
(Except for the headline, this story was not edited by GossipMantri staff and published from a syndicated feed.)