Pakistan and the International Monetary Fund (IMF) have reached a staff-level agreement for the release of second tranche of $700 million as part of an ongoing $3 billion bailout package.
This agreement, announced on Wednesday (15 November), provides significant relief to the cash-strapped country.
The IMF had initially approved the $3 billion loan in July of this year, with the first tranche of $1.2 billion already disbursed.
While essentially a bridge loan, it has offered substantial respite to Pakistan amid an acute balance of payments (BoP) crisis and declining foreign exchange reserves.
A team led by Nathan Porter, the IMF mission chief for Pakistan, conducted discussions in Islamabad from 2 November to 15 November to assess the first review of the country's economic program supported by a stand-by arrangement (SBA), according to a statement issued by the global lender following the discussions.
The statement revealed, "The IMF team has reached a staff-level agreement (SLA) with the Pakistani authorities on the first review of their stabilisation program supported by the IMF’s $3 billion."
"The agreement is subject to the approval of the IMF’s Executive Board. Upon approval, around $700 million will become available, bringing total disbursements under the program to almost $1.9 billion," the statement added.
The IMF advised Pakistan to persist with fiscal consolidation to reduce public debt while safeguarding development needs.
It also recommended strengthening the social safety net to protect vulnerable populations and implementing reforms to reduce costs in the energy sector and restore its viability.
The successful conclusion of these talks comes as Pakistan approaches general elections scheduled for 8 February.
Pakistan’s economy has faced significant challenges in recent years, placing immense pressure on the impoverished population due to unchecked inflation, making it increasingly difficult for many to meet basic needs.
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