IMF, Pakistan reach staff-level agreement

July 13, 2022 (MLN): Pakistan has reached a staff-level agreement with the International Monetary Fund (IMF) to resume its loan program, Bloomberg reported today, citing sources familiar with the matter.

As per the news agency, $1.2 billion disbursement is expected in August after the IMF’s management gives final approval. However, a clear statement is not up till now provided by the IMF representatives in Pakistan and the nation's finance ministry.

The program has been extended till July 2023, the first tranche is expected to be SDR894 million, equal to $1.2 billion, and the total program size increased by $1bn to $7bn compared to $6bn earlier.

To note, Pakistan has met all prior actions already for the revival of IMF loan program, as Islamabad has taken several steps to reduce its expenditure, increase energy prices and improve tax collection, as demanded by the IMF. 

In the past months, Pakistan has raised electricity tariffs and almost doubled diesel prices over the past two months to meet IMF conditions. Due to this, inflation has accelerated to a 13-year-high.

The disbursement would give some respite to Pakistan’s depleting foreign exchange reserves which are barely enough to cover 1.4 months of imports.

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