ISLAMABAD (AP) – The International Monetary Fund (IMF) said yesterday that weeks of talks with Pakistan have produced a preliminary agreement toward reviving a USD6 billion economic bailout for the Islamic nation.
Pakistan and IMF originally signed the accord in 2019, but the release of a key installment had been on the hold since earlier this year. That’s when the fund expressed reservations about a delay in Pakistan’s compliance with conditions of the bailout.
The IMF statement yesterday said that under the latest proposal, IMF would disburse about USD1 billion to Pakistan, bringing the total disbursement out of the USD6 billion bailout to about USD3 billion since 2019.
The talks this month yielded an agreement “subject to approval by the Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms”, the IMF statement said.
Such an approval by IMF’s executive board is considered a formality.
Muzzammil Aslam, a spokesman at Pakistan’s Finance Ministry, also confirmed the latest development, saying the staff-level agreement was reached between Pakistan and IMF after 45 days of discussion.
In April 2020, the IMF released USD1.4 billion to Pakistan, helping it handle an economic crisis amid a surge in fatalities from the coronavirus. At least 28,663 Pakistanis have died from COVID-19 since last year, while about 1.2 million tested positive from the new virus.
Analysts said the fund wants Pakistan to further reduce the budget deficit, increase tariffs of electricity and petrol, as well as curb money laundering and corruption.
The government in recent weeks complied with most of the conditions of IMF, but doing so made Prime Minister Imran Khan highly unpopular among people as inflation and the price of essential food soared.
In its statement yesterday, the IMF also praised some measures taken by Pakistan government, saying the country’s new moves could result in four-per-cent growth this year and 4.5-per-cent the fiscal year after that. Officials said the delay in agreement between Pakistan and the IMF was due to uneasy relations between Pakistan and the United States.