Washington (TDI): The International Monetary Fund (IMF) and Pakistan have reached a staff-level deal to unlock more funds for Pakistan. The approval for $1 billion under the Extended Fund Facility is still pending but IMF is ready to release $1.3 billion under the Resilience and Sustainability Facility (RSF) program.
RSF will span over twenty eight months and aims to provide support to Pakistan for climate resilience and economic recovery in a climate-resilient and sustainable way.
Talks with IMF have been going on since February through March. Initially being held in Karachi and Islamabad, the talks were later conducted virtually under the lead of Nathan Porter.
“Over the past 18 months, Pakistan has made significant progress in restoring macroeconomic stability and rebuilding confidence despite a challenging global environment,” IMF noted in its statement.
IMF and Pakistan reached an arrangement mid year, 2024 where the former agreed to support Pakistan’s economy with a $7 billion bailout program.
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The current release is part of that arrangement while IMF has also agreed to review progress for the last thirty seven months.
Pakistan’s macroeconomic indicators have improved and are showing signs of stability. Inflation has been recorded at its lowest since 2015 – 1.5% in February while it was 40% record high in May 2023 when the country feared an economic bankruptcy.
“While economic growth remains moderate, inflation has declined to its lowest level since 2015, financial conditions have improved, sovereign spreads have narrowed significantly, and external balances are stronger,” IMF said.
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It further remarked that “Upon approval, Pakistan will have access to about $1 billion under the EFF, bringing total disbursements under the program to about $2 billion.”
Last year, Pakistan’s Government hailed the agreement reached at with the IMF, raising the hopes of economic stability. The IMF program came with reform measures and the Government has since been ensuring to introduce policies that help implement those economic reforms.
Taxation sector is extensively under review and policy changes, so that Pakistan manages to touch the revenue goals which are essential for sustaining stability.
Nuzhat Rana is an Associate Editor at The Diplomatic Insight.
