Islamabad: The International Monetary Fund (IMF) has announced a new stand-by arrangement worth $3 billion with Pakistan to alleviate the country's mounting foreign debt. Pakistan's economy has been severely impacted, with inflation, the decline of the currency, and an inability to afford imports leading to a sharp decline in industrial output.
The announcement was made in Washington on Thursday, addressing the country's balance-of-payments crisis and the challenges posed by substantial external debt, aggravated by months of political turmoil that deterred foreign investment. Recognising the urgent need for assistance, IMF official Nathan Porter said, "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 SDR2,250 million (about $3 billion)."
The agreed-upon figure represents 111% of Pakistan's IMF quota and aims to provide temporary relief for the country's economic challenges. The stand-by deal between the IMF and Pakistan aims to provide crucial financial support and stability to address the country's economic challenges. The agreement reflects the commitment of both parties to work together and navigate the complex issues related to Pakistan's external debt and balance-of-payments crisis.
The deal, however, still requires approval from the IMF's executive board, which is expected to take place by mid-July, according to Porter.
Pakistan's ongoing negotiations with the IMF for the final installment of a $6.5 billion bailout package, agreed upon in 2019, have faced setbacks since November. The government has made last-minute revisions to the national budget in an attempt to fulfill the requirements of the agreement. The existing package is set to expire on Friday, and the new arrangement builds upon the efforts made by the IMF under the previous deal, said Porter.