IMF agrees to long-awaited bailout for Pakistan of US$3 billion, higher than expected
- The country faced catastrophic floods that killed 1,739 people, impacted millions and left US$30 billion damage
- The cash-strapped government has had financial help from friendly countries such as China, Saudi Arabia and the UAE
The International Monetary Fund agreed to provide US$3 billion to Pakistan – a long-awaited relief to bail out the impoverished country’s ailing economy.
The nine-month agreement must be approved by the IMF’s Executive Board, which is expected to make a final decision in mid-July, a top IMF official, Nathan Porter, said in a statement late on Thursday.
Porter, the IMF’s mission chief to Islamabad, said Pakistan’s economy has faced several external shocks, such as the catastrophic floods in 2022 that killed 1,739 people, caused US$30 billion in damage and impacted millions of Pakistanis. The country was also hit by an international commodity price spike in the wake of Russia’s war in Ukraine.
The IMF official said despite the authorities’ efforts to reduce imports and the trade deficit, reserves have declined to very low levels and liquidity conditions in the power sector also remain acute.
“Given these challenges, the new arrangement would provide a policy anchor and a framework for financial support from multilateral and bilateral partners in the period ahead,” the statement read.
Porter said over the past few days, the Pakistani authorities had “taken decisive measures to bring policies more in line with the economic reform programme supported by the International Monetary Fund,” including Parliament passing a revised budget.