Pakistan (Commonwealth) _ A $7 billion (£5.25 billion) loan has been authorized by the International Monetary Fund (IMF) for cash-strapped Pakistan.
The first $1 billion of the loan is expected to be given to the nation right away, with the remaining $3 billion to be repaid over the following three years.
Shehbaz Sharif, the prime minister, praised Kristalina Georgieva, the chief of the IMF, and her staff for their decision.
Pakistan is now the IMF’s fifth-largest debtor, having taken out more than 20 loans from the organization since 1958.
According to the IMF, the new program “will require sound policies and reforms” in order to stabilize and contribute to the economy’s increased resilience.
The country in South Asia has promised that this will be the last loan from the foreign lender. Islamabad consented to several unpopular measures as part of the agreement, including raising the amount of tax it collects from individuals and companies.
The nation has struggled for decades to meet its demands and has been dependent on IMF loans for years due to years of financial mismanagement.
The previous year, the nation was on the verge of going into default on its debts and had just enough foreign currency to cover just one month’s worth of imports.
In July 2023, the IMF granted a $3 billion bailout for Pakistan. Additionally, it got funding from Saudi Arabia and the United Arab Emirates (UAE), two allies.
Mr. Sharif claimed at the time that the bailout represented a significant advancement in the quest to stabilize the economy. He believed that it strengthens Pakistan’s economic standing to face short- to medium-term economic issues.
As part of an agreement with the IMF for a USD 7 billion loan package, Pakistan will impose levies totaling Rs 170 billion. Pakistan is requesting an IMF bailout package in order to keep the economy from collapsing.
Ishaq Dar, Pakistan’s finance minister, stated that his country has received a memorandum from the IMF outlining the terms and conditions for the completion of the loan program. However, he also noted that the parties have not yet reached a staff-level agreement on the crucial rescue for the financially beleaguered nation.
Following ten days of consultations with the government, an IMF delegation left Pakistan on Thursday night. Following this, Dar issued the remark.
Dar made the announcement following the announcement that virtual discussions on the ninth program review will continue by an IMF group, which departed Pakistan on Thursday night following ten days of talks with the government.
From January 31 to February 9, an IMF mission headed by Nathan Porter traveled to Islamabad to hold talks for the ninth review of the government’s program, which is funded by the IMF Extended Fund Facility (EFF) arrangement.
Pakistan is in dire need of financial support and an IMF bailout plan to keep its economy from collapsing, as its foreign exchange has fallen below USD 3 billion. The next tranche, worth USD 1.2 billion, will be sent to the cash-strapped nation upon the successful conclusion of the ninth review.
There was considerable misunderstanding regarding the conclusion of the discussions and whether or not a draft MEFP had been shared as the visiting party departed without making a final declaration.
Dar, though, emphasized that there was no miscommunication during the press conference on Friday. He stated that the government and IMF representatives would have a virtual conference on Monday to discuss this matter. “We insisted that they (the Fund delegation) give us the MEFP before leaving so we could look at it over the weekend,” he said.
The previous Pakistan Tehreek-e-Insaf-led administration was criticized for “economic destruction and misgovernance” by the finance minister, who admitted that Pakistan benefited from the reforms in some areas that the IMF had specified.
Dar announced the policy steps that the government and the IMF had decided upon, including the imposition of levies totaling Rs 170 billion. But he also said that the government will make an effort to make sure that the average person is not directly burdened by the levies.
Depending on the circumstances at hand, the government would present an ordinance or financial law to levy the levies, he added. Pakistan’s reserves of foreign currency dropped to USD 2.916 billion in the week that concluded on February 3. According to experts, the nation has about sixteen or seventeen days’ worth of imports left in its reserves.
In 2019, Pakistan signed an IMF program worth USD 6 billion, which was increased to USD 7 billion the previous year.
