In a major breakthrough, Pakistan and the International Monetary Fund (IMF) have reached an agreement unlocking over a $1 billion loan tranche under Extended Fund Facility (EFF) that had been stalled for the last five months, the country’s local media outlet Geo News said citing sources.
This loan tranche is part of a $6 billion bailout package which former Pakistani PM Imran Khan signed in 2019. The multibillion-dollar bailout package was signed to help Pakistan’s crippling economy. However, since then the package has been delayed after the controversy over $1.5 billion subsidy package announced by Khan which IMF asked how Pakistan will fund.
The agreement can be seen as a massive relief to Pakistan’s cash-strapped economy. It comes after 10 days of “tough” talks. The IMF mission has been in Islamabad since 31 January and has been engaging with the Pakistani government over the bailout package negotiations.
The agreement was reached in a meeting between Prime Minister Shehbaz Sharif and the IMF delegation, as per Geo News sources. Sharif from Lahore held a virtual conversation with IMF officials in Islamabad and reached the much-needed agreement, the sources added.
Earlier in the day, while sharing an update on the talks, the country’s Finance Minister Ishaq Dar gave a positive signal saying the talks were “on track.”
Pakistan’s economic state continues to remain in a dire state with high inflation, currency depreciation, and slumping of foreign exchange reserves to $2.91 billion. Now, that Pakistan has got the “good news,” the country’s $350 billion economy can take a breath of respite.
After the subsidy fiasco under the Imran government, the programme was stalled but the incumbent coalition government led by Shehbaz Sharif resumed the programme. In August, Pakistan received around $1.17 billion under the seventh and eighth reviews of the Extended Fund Facility (EFF).
However, the programme had again hit a snag in September after failed negotiations.
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