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IMF signs a staff-level deal with Pakistan, unlocking $1.2 billion pending board approval. Total support under two programs reaches $3.3 billion, aimed at stabilizing Pakistan’s economy, controlling inflation, and strengthening climate resilience after recent economic and environmental crises.
Representational Image (Source: Internet)
New Delhi: The International Monetary Fund (IMF) on Tuesday signed a staff-level agreement with Pakistan, providing Pakistan with approximately $1.2 billion in financial assistance. This assistance will be released after the IMF Board's approval. This assistance will help Pakistan overcome its economic crisis.
The IMF plans to provide Pakistan with a total of $3.3 billion in financial assistance under two separate programs. Of this, $1 billion will be provided under the Extended Fund Facility (EFF), while the remaining $200 million will be provided through the Resilience and Sustainability Facility (RSF). Both funds will be crucial for Pakistan's economic stability and development.
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The IMF said in a statement that Pakistan's economic reform program is on track. Under this plan, macroeconomic stability has been maintained in the country, restoring market confidence. Inflation remains under control, foreign exchange reserves are strengthening, and the financial situation is improving. Sovereign bond interest rates (spreads) have also declined significantly.
In its agreement with the IMF, Pakistan has pledged to adopt a strictly data-driven monetary policy to keep inflation under control. Furthermore, the country has committed to strengthening climate resilience following recent devastating floods. This step is considered essential to combat natural disasters.
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Pakistan's Finance Minister Muhammad Aurangzeb stated that following the agreement with the IMF, the country will soon return to capital markets. As part of this, it will issue green bonds denominated in Chinese yuan for the first time by the end of this year. Following this, Pakistan also plans to issue at least $1 billion in international bonds.
IMF support in September 2024 provided significant support to Pakistan's approximately $370 billion economy. At that time, the country was grappling with a deep economic crisis, which had weakened its currency significantly.
With IMF assistance, Pakistan has taken significant steps toward stabilizing its economic situation. This IMF staff-level agreement is an important step toward economic reform and stability for Pakistan.
It can strengthen its financial position and regain confidence in global capital markets. However, this support will only be effective if Pakistan fully fulfills its commitments and continues to reform its economic policies.
