IMF and the government announced on Monday that the IMF board had approved the seventh and eighth assessments of Pakistan’s bailout programme. This will allow more than $1.1 billion to flow into the cash-strapped economy.
The IMF agreed to extend the programme for one more year and increase funding by 720 million SDRs, which is equivalent to $940 million at the current exchange rate.
The country’s planning minister says that the money will be a lifeline for the South Asian country, which is still recovering from terrible floods that have caused at least $10 billion in damage.
In a statement, IMF Deputy Managing Director Antoinette Sayeh said that sticking to planned increases in fuel levies and energy tariffs is “crucial,” since Pakistan’s economy has been hurt by “unfavourable external circumstances.”
These include “repercussions from the conflict in Ukraine” and “domestic problems,” like those caused by policies that made growth uneven and unbalanced, ” he said.
The flooding was not mentioned in the fund’s report.
Pakistan’s economy is struggling with a big current account deficit and high inflation, and its foreign exchange reserves have dropped to the point where they can only cover a month’s worth of exports.
The news was first shared by Finance Minister Miftah Ismail on Twitter. Hours later, the fund announced the permission and the amount to be given out.
When it was approved in 2019, the Extended Fund Facility (EFF) programme had a starting value of $6 billion and a starting length of 36 months. Islamabad has been stuck since the beginning of the year, as it struggled to meet the lender’s goals.
Pakistan also asked for exemptions from some of the program’s requirements, which the IMF board agreed to.
Ismail also said that Pakistan didn’t go into default because the government tried hard economic measures to get the programme back on track.
Pakistan had been trying to get a clean bill of health from the lender. With the IMF board’s approval, Pakistan will be able to get money from other multilateral and bilateral sources.
