The International Monetary Fund (IMF) and the government announced on Monday that the IMF board had approved the seventh and eighth assessments of Pakistan’s bailout programme, enabling for the flow of more than $1.1 billion to the cash-strapped economy.
The IMF agreed to add an additional year to the programme and raise funding by 720 million SDRs, or $940 million at the current exchange rate.
According to the country’s planning minister, the cash will be a lifeline for the South Asian nation reeling from disastrous floods that have caused damage totaling at least $10 billion.
IMF Deputy Managing Director Antoinette Sayeh said in a statement that it is important to adhere to scheduled increases in fuel levies and energy tariffs “crucial,” given that Pakistan’s economy “has been hampered by unfavourable external circumstances.
These include “repercussions from the conflict in Ukraine, as well as domestic difficulties, such as those brought on by accommodating policies that led to uneven and imbalanced growth, “he observed
The fund’s statement made no mention of the flooding.
Pakistan’s economy is struggling with a big current account deficit and severe inflation, and its foreign exchange reserves have decreased to levels that only support a month’s worth of exports.
Hours after Finance Minister Miftah Ismail had first broken the news via Twitter, the fund announced the permission and the sum to be distributed.
When it was approved in 2019, the Extended Fund Facility (EFF) programme had a 36-month starting duration and a $6 billion beginning value. As Islamabad struggled to satisfy the lender’s targets, it has stagnated since the beginning of the year.
In addition, the IMF board granted Pakistan’s request for exemptions from certain of the program’s requirements.
Ismail added that Pakistan was saved from default by government efforts to restart the programme through hard corrective economic measures.
The approval from the IMF board will allow Pakistan, which was seeking a clean bill of health from the lender, access to other multilateral and bilateral finance sources.