IMF reaches staff-level agreement with Pak to release last tranche of USD 3 billion bailout

Global lender, IMF, has reached a staff-level agreement with Pakistan on the final review of a USD 3 billion bailout to release the last tranche of USD 1.1 billion after approval from the Fund’s Executive Board.

The funds are the final tranche of a USD 3 billion Stand-By Arrangement which Pakistan had secured last year, that averted a sovereign debt default. Islamabad is also seeking another long-term bailout.

An International Monetary Fund (IMF) team, led by Nathan Porter, visited Islamabad from March 14-19, 2024, to hold discussions on the second review of Pakistan’s economic program supported by an IMF Stand-By Arrangement (SBA).

“The agreement recognizes the strong program implementation by the State Bank of Pakistan and the caretaker government in recent months, as well as the new government’s intentions for ongoing policy and reform efforts to move Pakistan from stabilization to a strong and sustainable recovery, the IMF said in a statement.

The Fund said the review will likely be considered by the IMF’s Board in late April given the timing of the Second Review mission, immediately following the formation of the new cabinet.

The Global Lender acknowledged the improvement in Pakistan’s economic and financial position since the first review, but added that country’s growth is modest and inflation remains well above target.

It emphasized on bringing policy and reforms to address Pakistan’s deep-seated economic vulnerabilities amidst the ongoing challenges posed by elevated external and domestic financing needs and an unsettled external environment.

The IMF also announced that Pakistan has shown interest in taking a successive medium-term Fund-supported program and the discussions for the same will be done in coming months.

Last year, the IMF Executive Board had approved the nine-month arrangement with Pakistan allowing for an immediate disbursement of USD 1.2 billion, with the rest to be phased over the program’s duration — subject to two quarterly reviews.

Subsequently in November 2023, a Staff-Level Agreement (SLA) was reached between the IMF staff and the country regarding the first review under Pakistan’s SBA. In January, the IMF released the much awaited USD 700 million tranche.