Pakistan reached a staff-level agreement with the International Monetary Fund (IMF) to release $3 billion in critical bailout funds following a long drawn-out review process for the cash-strapped economy since November last year.
The agreement is under a stand-by arrangement (SBA), as the existing Extended Financing Facility (EFF) programme signed in 2019 expires later on Friday (today).
Here are some facts about the lead-up to the last-gasp agreement:
May 12, 2019: IMF approves a $6bn, 39-month bailout package for Pakistan under the EFF struck with the government of then-prime minister Imran Khan.
April 9, 2022: Imran’s government is removed in a parliamentary vote of no confidence. Shehbaz Sharif takes over as prime minister as the country reels from economic and political turmoil.
July 14, 2022: IMF and Pakistan reach staff-level agreement for the release of about $1.2bn in the last successful EFF review until the SBA.
Aug 29, 2022: The IMF board approves the seventh and eighth reviews of the bailout programme, allowing for a release of over $1.1bn and an extension by a year.
Sept 27, 2022: Miftah Ismail resigns as finance minister, the fifth such minister to be replaced in less than four years.
Ishaq Dar takes over as finance minister for his fourth stint in the job, with Pakistan’s next staff review, the ninth under the EFF, and funds tranche due in November.
November 2022: Pakistan, IMF begin virtual engagement for the ninth review of the loan programme. A staff delegation visit does not materialise due to differences on programme targets, and Dar hits out at the IMF for the delay.
January 9: Pakistan reiterates commitment to completing the IMF programme in a meeting on the sidelines of a climate conference in Geneva.
January 31: An IMF staff delegation visits Pakistan after weeks of delays, but the 10-day visit concludes without an agreement to send the matter to the board, increasing economic uncertainty.
February 13: Pakistan, IMF decide to resume talks virtually on steps needed to secure an agreement for the ninth review.
February 28: Government unhappy as IMF changes interpretations of at least four prior actions ahead of reaching an SLA.
May 5: IMF mission chief says continuing to work with Pakistani authorities to bring the ninth review to conclusion once necessary financing is in place.
June 22: Sharif meets IMF Managing Director Kristalina Georgieva in Paris, looking to secure a last-minute release of the stalled funds before the programme expires on June 30.
June 24: Pakistan changes its budget for the financial year starting on July 1, including the latest fiscal tightening measures dictated by the IMF.
June 26: Pakistan’s central bank raises its benchmark interest rate by 100 basis points to 22 per cent at an emergency meeting days before the IMF programme expires.
June 30: IMF reaches staff-level agreement with Pakistan on $3bn funding, which is spread over nine months and is higher than expected.
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