IMF: Staff-level agreement reached with Pakistan for release of $1.17 billion loan tranche

Islamabad Pakistan is at a “challenging economic juncture”, the IMF has said as it reached a pre

Islamabad Pakistan is at a “challenging economic juncture”, the IMF has said as it reached a preliminary staff-level agreement on the combined seventh and eighth reviews for a $6 billion loan facility for the cash-strapped country.

The agreement paves the way for the release of the much-awaited $1.17 billion loan tranche that had been on hold since earlier this year, the Dawn News reported on July 14.

The deal materialised after Pakistan met the IMF’s demand that the country achieve a primary budget surplus of ₹152 billion to revive the bailout package, the report said.

In a statement on its website, the IMF said it has reached “a staff-level agreement [SLA] with the Pakistan authorities for the conclusion of the combined seventh and eight reviews of the extended funded facility [EFF] supported programme”. It added that the agreement is subject to approval by its Executive Board.

“Subject to Board approval, about $1,177 million [SDR 894m] will become available, bringing total disbursements under the programme to about $4.2 billion,” it said.

The international lender said a team led by IMF Mission Chief to Pakistan Nathan Porter finalised the discussions with Pakistan and that it had also agreed to consider extending its EFF, currently worth $6 billion, till the end of June 2023, as well as augmenting it by $720 million to expand its size to $7 billion.

The statement said this decision was taken to support the programme’s implementation, meet Pakistan’s higher financing needs in FY23 and catalyse additional financing. Soon after the IMF released the statement, Finance Minister Miftah Ismail also confirmed the news on Twitter.