Pakistan Loan Program: IMF Agrees to Resume Pakistan Loan Program, Distributing $1.2 Billion in August: Report
Bloomberg, citing officials, said a disbursement of $1.2 billion is expected in August after IMF management gives final approval. The lender also agreed to increase the size of the loan program by $1 billion – bringing it to a total of $7 billion – and to extend it until June 2023, Bloomberg added.
Pakistan is in desperate need of money to avert a balance of payment crisis which is approaching day by day due to the sharp rise in global oil and commodity prices.
According to Bloomberg, Pakistan’s foreign exchange reserves can now cover less than two months of imports. Inflation in the country has also accelerated to a 13-year high. Needing to get back into the IMF’s good graces, the new government, led by Shehbaz Sharif, cut subsidies and made adjustments in a budget presented on June 10 that aimed to reduce the government’s budget deficit, which was one key objectives of the IMF. terms. The Shehbaz Sharif recently raised electricity tariffs and nearly doubled diesel pump prices in the past two months to meet IMF conditions.
Pakistan entered a $6 billion IMF program in 2019 spread over three years and three months, but with less than half the amount disbursed, the IMF suspended the bailout earlier this year after the former Prime Minister Imran Khan announced unfunded subsidies for oil and electricity. sectors. Khan’s government was overthrown in April.