IMF deal with Pakistan would jumpstart $ 6 billion bailout
ISLAMABAD (AP) – The International Monetary Fund said on Monday that weeks of talks with Pakistan have resulted in a preliminary deal to relaunch a $ 6 billion economic bailout for the Islamic nation.
Pakistan and the IMF initially signed the deal in 2019, but publication of a key payment has been on hold since the start of this year. It was at this point that the fund expressed reservations about a delay in Pakistan respecting the terms of the bailout.
The IMF statement said on Monday that according to the latest proposal, the IMF would disburse about $ 1 billion to Pakistan, bringing total bailout disbursements from $ 6 billion to about $ 3 billion since 2019, the statement said.
This month’s talks resulted in an agreement “subject to the approval of the Executive Board, following the implementation of prior actions, particularly on fiscal and institutional reforms,” the IMF statement said.
Such approval by the IMF Executive Board is considered a formality.
Muzzammil Aslam, spokesman for Pakistan’s finance ministry, also confirmed the latest development, saying the staff level deal was reached between Pakistan and the IMF after 45 days of talks.
In April 2020, the IMF released $ 1.4 billion to Pakistan, helping it manage an economic crisis amid an increase in deaths from the coronavirus. At least 28,663 Pakistanis have died from COVID-19 since last year, while around 1.2 million have tested positive for the new virus.
Analysts say the fund wants Pakistan to further reduce the budget deficit, increase electricity and gasoline prices, as well as money laundering and corruption. In recent weeks, the government has complied with most IMF conditions, but this has made Prime Minister Imran Khan very unpopular among the population as inflation and the price of essential food skyrocket.
In its statement on Monday, the IMF also praised some measures taken by the Pakistani government, saying the country’s new measures could lead to growth of 4% this year and 4.5% the following fiscal year.
Officials said the delay in the agreement between Pakistan and the IMF was due to the difficult relations between Pakistan and the United States. US President Joe Biden has avoided calling Khan since coming to power. Khan has publicly refused this year to provide bases in Washington for operations in Afghanistan.
The United States, which wields a major influence over the IMF, said the fund should not finance the tens of billions of dollars in loans Pakistan has taken out from China as part of the global “la Beijing Belt and Road.