Pakistan’s finance minister yesterday said the International Monetary Fund deposited a much-awaited first installment of $1.2 billion with the country’s central bank under a recently signed bailout aimed at enabling the impoverished Islamic nation to avoid defaulting on its debt repayments.
Minister Ishaq Dar in televised remarks said the remaining $1.8 billion would be received from the IMF over the next nine months. The funds will bolster the country’s foreign exchange reserves, which shrank to less than $4 billion in recent months, raising fears of a default.
The country’s foreign exchange reserves are likely to rise to $14 billion this week, Dar said.
The latest development came a day after the IMF said its executive board had approved an agreement to release a $3 billion loan to support Pakistan’s economic stabilization program.
Wednesday’s announcement came less than two weeks after Pakistan and the IMF agreed to the plan following meetings with Prime Minister Shehbaz Sharif, Dar and other officials.
On Wednesday, IMF head Kristalina Georgieva said in a statement that “Pakistan’s economy was hit hard by significant shocks last year, notably the spillovers from the severe impacts of floods, the large volatility in commodity prices, and the tightening of external and domestic financing conditions.”
She said the $3 billion bailout, if “implemented faithfully” by Pakistan, will give it an opportunity to regain macroeconomic stability and address imbalances through consistent policy implementation.
The IMF bailout for Pakistan had been on hold since December because of the country’s lack of compliance with a 2019 agreement signed between the IMF and former Prime Minister Imran Khan. A breakthrough in talks came last month when Sharif met with IMF head Georgieva in Paris at the Summit for a New Global Financing Pact to discuss the revival of the $6 billion bailout that was to expire on June 30.
Sharif’s direct interaction with the IMF resulted in the signing of a new nine-month deal.
Since coming into power in April 2022 by ousting Khan through a no-confidence vote in parliament, Sharif has been trying to overcome the economic crisis. Pakistan’s economy witnessed a major shock last summer when devastating floods killed 1,739 people and caused $30 billion in damage.
Currently, rivers swollen by monsoon rains have inundated dozens of villages in Pakistan’s eastern Punjab province, displacing 1,500 people. Nearly 90 people have died in weather-related incidents since June 25 when the monsoon rains began. MUNIR AHMED, ISLAMABAD, MDT/AP
