IMF Reaches Staff-Level Agreement with Pakistan for $1.1 Billion

The International Monetary Fund (IMF) announced on Tuesday that it has reached a staff-level agreement with Pakistan on the final review of a $3 billion bailout program, paving the way for the disbursement of $1.1 billion to the country pending approval from the Fund’s Executive Board.

“The IMF team has reached a staff-level agreement with the Pakistani authorities on the second and final review of Pakistan’s stabilization program supported by the IMF’s US$3 billion,” Nathan Porter, who led the IMF delegation, said in a statement.

In a statement, the IMF acknowledged the State Bank of Pakistan and the caretaker government for their strong program implementation in recent months and expressed confidence in the new government’s intentions for ongoing policy and reform efforts to transition Pakistan from stabilization to a robust and sustainable recovery.

“Given the timing of the Second Review mission, immediately following the formation of the new cabinet, we expect the review to be considered by the IMF’s Board in late April,” IMF said in a statement on its website

Despite the earlier schedule indicating the conclusion of review talks by March 18, informed sources revealed that intensive sector-wise meetings were held, albeit with reduced working hours during Ramazan.

During the discussions, both sides agreed on contingency measures to address data gaps in case of any deviations for the period ending March 31. Regular communication between the two parties will continue in the lead-up to presenting Pakistan’s case to the Fund’s executive board for approval.

Significant progress was made on Monday, with detailed discussions focusing on enhancing Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) laws to align with international standards. Additionally, a comprehensive plan was devised to address circular debt in the electricity and gas sectors, aiming to freeze outstanding debts and revise tariffs effectively from July 1, 2024, ensuring predictability for consumers’ monthly fuel costs.

The plan entails scaling down the current circular debt, exceeding Rs3 trillion, which includes both fresh and existing stock. Measures are also in place to revise gas tariffs for consumers starting from July 1, 2024, with regulatory processes to be completed well in advance of the deadline