Islamabad, June 30 (EFE).- Pakistan and the International Monetary Fund (IMF) reached a staff-level agreement on a nine-month stand-by arrangement (SBA) for about $3 billion, a government spokesperson said Friday.
The agreement is subject to approval by the IMF’s executive board by mid-July.
“Both the government of Pakistan and the IMF have reached a staff-level agreement for $3 billion,” Marriyum Aurangzeb, a spokesperson for the government led by Prime Minister Shehbaz Sharif, told EFE on Friday.
In a statement, the global lender said that its staff team was led by Nathan Porter, who held in-person and virtual meetings with the Pakistani authorities to discuss a new financing engagement under an IMF stand-by arrangement.
“I am pleased to announce that the IMF team has reached a staff-level agreement with the Pakistani authorities on a nine-month stand-by arrangement in the amount of SDR2,250 million (about $3 billion or 111 percent of Pakistan’s IMF quota),” Porter said, according to the statement.
He said that the new SBA builds on the authorities’ efforts under Pakistan’s 2019 Extended Fund Facility-supported program which expires at the end of June.
Porter said that the country’s economy had faced several external shocks such as the catastrophic floods in 2022 that impacted the lives of millions of Pakistanis as well as an international commodity price spike in the wake of Russia’s war in Ukraine.
“As a result of these shocks as well as some policy missteps—including shortages from constraints on the functioning of the FX market—economic growth has stalled,” he added.
He said that given these challenges, the new SBA would provide a policy anchor and a framework for financial support from multilateral and bilateral partners in the period ahead.
The long-delayed agreement comes after the government adopted some changes to its annual budget, including imposing new taxes and reducing government spending,as a last ditch effort over the weekend.
The budget review was made after PM Sharif held three meetings with IMF chief Kristalina Georgieva on the sidelines of the Global Financing Summit in Paris last week.
Pakistan was desperate to ink the deal as the country is currently facing an acute balance of payments crisis with depleting foreign exchange reserves.
Responding to the deal, Finance Minister Ishaq Dar took to Twitter saying “alhamdoLilah! (Thank God!)”
Pakistan’s foreign exchange reserves have slipped to an alarming level of below $3 billion for the first time in nine years, which is barely enough to cover less than one month’s bill of controlled imports.
Economic analysts had warned that the country could fall into a debt default if the IMF program was not revived. EFE