- Staff Level Agreement Standby Agreement pending IMF approval
- The IMF meeting will be held in July and a decision will be taken then
- Funding of $3 billion will provide relief over 9 months
The appeal of Pakistan Prime Minister Shahbaz Sharif who went to the French capital Paris in the past few days and requested for help has finally come to fruition. A standby agreement has been entered into with Pakistan on behalf of the International Monetary Fund (IMF). After this agreement, Pakistan will get help of three billion dollars. This information has been given by the executive officer of the IMF, Nathan Porter. The IMF approved the 21st loan for Pakistan on July 3, 2019. The program was ending on June 30. This new announcement has averted the danger of Pakistan becoming miserable.
Board approval is pending
This $3 billion is subject to approval by the IMF Board of the Staff Level Agreement Standby Agreement. The announcement came as a major relief to Pakistan, which was on the verge of default. The country is currently grappling with a severe balance of payments crisis and dwindling foreign exchange reserves. IMF official Nathan Porter said the new standby agreement is based on Pakistan’s 2019 Extended Fund Facility-supported program, which expires at the end of June. The IMF board is scheduled to meet in July to decide whether the deal will be approved.
Challenges facing Pakistan
The $3 billion fund from the IMF, which is over nine months, is a big relief for Pakistan. A loan program of $6.5 billion was approved in the year 2019. Of this, $2.5 billion is now outstanding. IMF official Nathan Porter also said in his statement that Pakistan’s economy is currently facing many challenges. These challenges include last year’s devastating floods and rising prices of essential food items following the war in Ukraine.
The Finance Minister made a statement
He said stockpiles have fallen to very low levels despite the authorities’ efforts to reduce imports and trade deficit. Given these challenges, the new arrangement will provide a framework for financial assistance from multilateral and bilateral partners in the future. Finance Minister Ishaq Dar also said on Thursday that a staff-level agreement on a major bailout deal with the IMF is almost complete. It is expected to be announced in the next 24 hours.
