Pakistan, IMF reach agreement on reforms to release around $500 million

Published February 16, 2021
The International Monetary Fund (IMF) headquarters building is seen in Washington, US. — Reuters/File
The International Monetary Fund (IMF) headquarters building is seen in Washington, US. — Reuters/File

The International Monetary Fund (IMF) and Pakistan on Tuesday reached a staff-level agreement over reforms that will lead to the release of around $500 million in funds, the IMF and the country's finance ministry said.

The package strikes an appropriate balance between supporting the economy, ensuring debt sustainability and advancing structural reform, the fund said in a statement.

"Pending approval of the Executive Board, the reviews' completion would release around US$500 million," the IMF said.

Finance Minister Dr Abdul Hafeez Shaikh also confirmed the agreement on Twitter, saying that "overcoming the challenges created by the pandemic has required concerted effort".

"This is a good development for Pakistan," he added.

In a statement, IMF said that Pakistan's progress under the Extended Fund Facility (EFF) had been temporarily disrupted by the shock of the pandemic.

"The Pakistani authorities remain committed to ambitious policy actions and structural reforms to strengthen economic resilience, advance sustainable growth, and achieve the EFF’s medium-term objectives," the statement noted.

Reacting to the development, Minister for Industries and Production Hammad Azhar said that Pakistan's economy has "successfully gone through a stabilisation phase, fared better than most countries during the Covid-19 shock and is now entering the growth period".

The agreement with the IMF would "provide certainty and buffers to the economy", he said.

Last month, State Bank of Pakistan Governor Dr Reza Baqir had said that Pakistan was in talks with the IMF to put the fiscal support programme back on track.

"We hope to have good news for the market and the world that we are putting the programme back on track," Baqir had said.

Last year, staff from the IMF and Pakistani authorities reached an agreement to pave the way for a disbursement of $450m in IMF funds pending approval from the global lender's executive board.

Pakistan and the IMF have been working to implement IMF-supported economic reforms, in particular tax collection, aimed at stabilising the economy and shoring up a yawning fiscal deficit.

Though the bailout programme was still pending, Pakistan received $1.4 billion in emergency financing from the IMF to allow it to fund targeted and temporary spending increases aimed at containing the pandemic and mitigating its economic impact.

Authorities are counting on the IMF bailout package to bolster Pakistan's fiscal position and increase global confidence in its economy.

Pakistan entered a $6 billion IMF programme in 2019.

Opinion

Kashmir question
06 Mar 2021

Kashmir question

Every single spell of détente evaporates before our very eyes.
Inventing cultural nostalgia
06 Mar 2021

Inventing cultural nostalgia

Glorifying violence & conquest through fictionalised history will have devastating consequences for Pakistan.

Editorial

Vote of confidence
Updated 06 Mar 2021

Vote of confidence

PRIME MINISTER Imran Khan’s decision to take a vote of confidence from parliament today is a bizarre move.
06 Mar 2021

PSL disaster

RAPID escalation in the number of coronavirus cases has led to the postponement of the Pakistan Super League’s...
06 Mar 2021

India ranking

WHILE India has often tooted its own horn as the ‘world’s largest democracy’ — being supported in this...
Ravi project
Updated 05 Mar 2021

Ravi project

THE assault by an enraged group of farmers on a provincial revenue team assigned to acquire land for the...
05 Mar 2021

Climate change

PAKISTAN received much less rainfall in January 2021 as compared to previous years, making it the 17th driest month...
05 Mar 2021

Antimicrobial resistance

WITH the focus on Covid-19, many health issues, though otherwise recognised as serious medical problems, tend to be...