ISLAMABAD: Pakistan has reached a staff-level agreement with the International Monetary Fund to resume a stalled $6 billion loan program, Bloomberg said on Wednesday, quoting a government official familiar with the matter.
Pakistan entered the IMF program in 2019 spread over three years and three months, but with less than half the amount disbursed, the IMF suspended the bailout earlier this year after the previous prime minister, Imran Khan, announced unfunded subsidies for the oil and power sectors. Khan’s government was ousted in April. The new government has since raised the prices of petroleum products at least four times to meet IMF conditions.
Pakistan last month said it had received economic and financial targets from the IMF that once agreed and ratified should pave the way for the lender to unlock a suspended program.
Pakistan desperately needs the money to avert a balance of payment crisis that is being brought closer by the day as a result of the sharp rise in global oil and commodity prices. Central bank foreign currency reserves have fallen dangerously low, and the economy is reeling from a sharp depreciation in the Pakistani rupee and double-digit inflation.
“A $1.2 billion disbursement is expected in August after the IMF’s management gives final approval,” Bloomberg said.
“The Washington-based lender has also agreed to increase the loan program size by $1 billion — taking it to a total $7 billion — and extend it through June 2023.”
The IMF and the finance ministry have not responded to the Bloomberg report but a media director for the finance ministry, Birj Lal Dosani, told Arab News on Wednesday: “We have no update on the IMF loan program so far.”
