The International Monetary Fund (IMF) board approved the seventh and eighth reviews of Pakistan’s bailout programme, allowing for a release of over $1.1 billion to the cash-strapped economy, the fund and the government said on Monday.
According to sources, the IMF has agreed to extend the programme by a year and increase the total funding by 720 million special drawing rights, or about $940 million as per the current exchange.
The funds will be a lifeline to Pakistan which is suffering from devastating floods that have caused loss worth $10 billion according to the country’s planning minister.
In a statement, IMF Deputy Managing Director Antoinette Sayeh said adhering to scheduled increases in fuel levies and energy tariffs is “essential” as Pakistan’s economy “has been buffeted by adverse external conditions.” These include “spillovers from the war in Ukraine, and domestic challenges, including from accommodative policies that resulted in uneven and unbalanced growth,” he noted.
Pakistan’s foreign exchange reserves have fallen drastically to levels that cover only a month of exports. The country’s economy is weighed down with a massive current account deficit and very high inflation.
The fund announced the approval and the amount to be disbursed hours after Finance Minister Miftah Ismail had broken the news via Twitter.
The Extended Fund Facility (EFF) programme was initially for 36 months and worth $6 billion at the time of its approval in 2019. It had stalled since earlier this year as Islamabad struggled to meet targets set by the lender, according to Indian media publication – The Hindustan Times.
The IMF board has also approved Pakistan’s request for waivers as the country failed to meet some of the programme’s criteria. Ismail also said government efforts to get the programme back on track via painful corrective economic measures had saved the country from default.
“We should now be getting the 7th & 8th tranche of USD 1.17 billion. I want to thank the Prime Minister @CMShehbaz for taking so many tough decisions and saving Pakistan from default. I congratulate the nation,” he tweeted.
