IMF reaches staff-level accord with Pakistan to disburse $ 1.17 b

NUSA DUA (Reuters): The International Monetary Fund (IMF) on Thursday said it had reached a staff-level agreement with Pakistan that would pave the way for disbursement of $ 1.17 billion, if approved by the IMF board, and was considering topping up the program.

In a statement, the IMF said its staff had reached agreement on policies under a review of its Extended Fund Facility (EFF) program that could bring total disbursements under the program to about $ 4.2 billion, if approved.

The breakthrough could be barely more timely, with the high price of energy imports pushing Pakistan to the brink of a balance of payments crisis.

Its foreign currency reserves have fallen as low as $ 9.8 billion, hardly enough for five weeks of imports, and the Pakistani rupee has weakened to record lows against the dollar.

“The Agreement with the Fund has set the stage to bring country out of economic difficulties,” Prime Minister Shehbaz Sharif said in a tweet.

Finance Minister Miftah Ismail said in a tweet that Pakistan would soon “receive $ 1.17 billion as the combined 7th & 8th tranche” of the program.

Pakistan entered a 39-month, $ 6 billion IMF program in 2019, but less than half of the amount has been disbursed to date as Islamabad has struggled to keep targets on track.

In order to meet Pakistan higher financing needs, the IMF statement said its board would also consider an extension of the EFF until the end of June 2023, and whether to top it up by nearly $ 1 billion.

Returning to the IMF program should also open up other external financing avenues for Pakistan.