Pakistan and the International Monetary Fund (IMF) is said to have reached an “agreement” unlocking over a $1 billion loan tranche under Extended Fund Facility (EFF) that had been stalled for the last five months, the country’s local media outlet Geo News reported.
Secretary of Finance Hamed Sheikh, in a statement released late Thursday night, said that “an agreement has already been struck with the IMF on prerequisite measures”. He added that the IMF mission which is headed by Nathan Porter will now release a detailed statement after getting approval from Washington.
“The negotiations with the IMF have been completed. The IMF has handed over the MEFP [Memorandum of Economic and Financial Policies] document [to Pakistan],” he added.
This loan tranche is part of a $6 billion bailout package which former Pakistani PM Imran Khan signed in 2019. The multibillion-dollar bailout package was signed to help Pakistan’s crippling economy. However, since then the package has been delayed after the controversy over $1.5 billion subsidy package announced by Khan which IMF asked how Pakistan will fund.
The agreement can be seen as a massive relief to Pakistan’s cash-strapped economy. It comes after 10 days of “tough” talks. The IMF mission has been in Islamabad since 31 January and has been engaging with the Pakistani government over the bailout package negotiations.
Earlier in the day, while sharing an update on the talks, the country’s Finance Minister Ishaq Dar gave a positive signal saying the talks were “on track.” Pakistan’s economic state continues to remain in a dire state with high inflation, currency depreciation, and slumping of foreign exchange reserves to $2.91 billion.
After the subsidy fiasco under the Imran government, the programme was stalled but the incumbent coalition government led by Shehbaz Sharif resumed the programme. In August, Pakistan received around $1.17 billion under the seventh and eighth reviews of the Extended Fund Facility (EFF).
However, the programme had again hit a snag in September after failed negotiations.
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