Cash-strapped Pakistan and the IMF on Thursday signed a staff-level agreement after tough parleys, unlocking over $1 billion loan tranche under Extended Fund Facility (EFF) for the country's ailing economy.
A meeting took place between Prime Minister Shehbaz Sharif and the International Monetary Fund (IMF) delegation, where the mission informed the premier about the agreement.
According to government sources, the two sides reached a consensus over the details of loans and Prime Minister Sharif also approved the deal.
Finance minister Ishaq Dar was tasked to share it with the masses though the media.
The two sides discussed all aspects of the ailing economy of Pakistan and the fund insisted on tough conditions, including increase in electricity and gas prices and raising new taxes, to bridge the gap in the budget deficit.
Advertisement
The two sides had finally reached consensus over the details of the lending programme.
The IMF delegation led by Nathan Porter began talks on January 31 with the Pakistan side headed by Finance Minister Dar to sort out differences over the government's fiscal policy that had stalled the release of over $1 billion from the bailout package.
In the first phase, Pakistan’s technical discussion with the IMF went on till February 3.
It was followed by the second phase of policy negotiations that concluded on February 9 to finalise a memorandum of economic and financial policies.
The IMF funding is crucial for the $350-billion Pakistan economy facing a balance-of-payments crisis with the country's foreign exchange reserves slipping below $3 billion for the first time in nine years on Thursday, reducing import capacity to just over two weeks.
Advertisement
Pakistan entered a $6 billion International Monetary Fund (IMF) programme during Imran Khan's government in 2019, which was increased to $7 billion last year.
The programme's ninth review was pending with talks being held between IMF officials and the government for the release of $1.18 billion.
Earlier, Minister of State for Finance and Revenue Aisha Ghaus Pasha said the two sides "are very close to the finalisation."
The successful ninth review would open venues for bilateral loans from different friendly countries and multilateral institutions.
Pakistan’s reserves have fallen below $3 billion and the country is feared to default on its external liabilities unless the IMF unlocks its funds for it.
The availability of IMF money will avoid the default but it is feared to bring a tsunami of price hike.
Just one email a week