Pakistan will get $700 million after review success: IMF

On Wednesday, the IMF said that it had reached a staff-level agreement with Pakistan regarding the initial review of a $3 billion bailout, thereby enabling the country to receive $700 million in funding.

The International Monetary Fund (IMF) required Pakistan to implement a number of reforms prior to the July bailout, including a revision of its budget, an increase in its policy rate, and an increase in the cost of natural gas and electricity.

The second tranche of the bailout, which consists of the cash to be disbursed, is contingent upon approval by the IMF’s executive board.

“Upon approval around $700 million (SDR 528 million) will become available bringing total disbursements under the program to almost $1.9 billion,” IMF Pakistan mission chief Nathan Porter said in a statement.

After two weeks of technical and policy discussions in Pakistan, an IMF mission headed by Porter came to an end on Wednesday. It examined if Pakistan was meeting the requirements outlined in the July standby agreement, which had disbursed a first tranche of $1.2 billion right away to support the economies of South Asia and prevent a sovereign debt default.

Pakistan was experiencing a severe balance of payments crisis due to historically high inflation, an unprecedented devaluation of its currency, and a decline in its foreign exchange reserves to barely three weeks’ worth of controlled imports.

In order to meet fiscal adjustments, the IMF also forced Pakistan to levy an additional $1.34 billion in taxes as part of the bailout agreement. The measures contributed to May’s record-breaking 38% year-over-year inflation, the highest in Asia, which is still above 30%.

(With agency inputs)