The International Monetary Fund (IMF) has agreed to revive a 6-billion-dollar bailout loan for Pakistan, allaying fears the nuclear power might become the second South Asian country to default on international liabilities.
A staff-level agreement has been reached between the global crisis lender and Pakistan for the disbursement of a 1.17-billion dollars’ tranche under the loan agreed upon in 2019 but suspended several times.
Both sides said on Thursday.
An IMF policy board will now approve the agreement that was reached after Islamabad took several fiscal and monetary measures to control huge budgetary and current account deficits, an IMF statement said.
The board is expected to enhance the size of the loan from the current six billion dollars to seven billion dollars and extend the duration until June next year, the statement added.
Pakistan’s government has increased energy prices by more than 50 per cent, impose a one-time super tax on corporate earnings, and promised to reform the power sector to control losses to win back the loan.
There were fears that Pakistan, the fifth most populous nation with 220 million people, might default on its huge international liabilities like Sri Lanka.
Pakistan’s foreign exchange reserves fell below 10 billion dollars, hardly enough to support imports for two months.
“We are out of the mess now,” Finance Minister Miftah Ismail said in the capital Islamabad after the IMF announcement.
Economic experts said the revival of the IMF loan would help Pakistan seek funds from political ally China, friendly countries in the Middle East like Saudi Arabia, and other global lenders. (NAN)
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