ISLAMABAD: Finance Minister Miftah Ismail said on Saturday that Pakistan expected to reach a staff-level agreement with the International Monetary Fund (IMF) next month, paving the way to revive a $6 billion bailout package and stabilize the country’s cratering economy.
Pakistan is in dire need of external finances, hurt by high inflation, reserves declining to as low as less than two months’ of imports, and a fast-weakening currency.
Discussions between the IMF and the country’s new government, led by Shehbaz Sharif, had been deadlocked for weeks over the terms of reviving the bailout, which was announced in 2019 and later suspended after Pakistan’s previous cabinet failed to meet some loan conditions, like cutting energy subsidies.
On Friday, the government sharply increased fuel prices for consumers by about 20 percent to unlock a $1 billion tranche of the IMF loan.
“We expect the staff level agreement to be reached in the month of June,” Ismail told reporters. “After the staff-level agreement is reached, a board meeting will be held after which the money will flow in.”
The finance minister said Pakistan had requested the IMF to extend its program by one year and add an additional $2 billion to it.
He said money from the IMF will unlock further funds for Pakistan from other international financial institutions, including expected $1 billion from the World Bank for rice purchase.
“We think once the IMF (funds) are unlocked, we will get lots of funds from multilateral (organizations).”
The minister said he was also expecting “further help” from Saudi Arabia, but added he would disclose more details in July.
“Saudi Arabia’s finance minister announced three days ago, in Switzerland, that their government will re-roll their $3 billion deposits that are kept in Pakistan,” Ismail said. “Apart from that, Saudi Arabia is trying to extend further help.”
Saudi Minister of Finance Mohammed Al-Jadaan earlier this week told Reuters Saudi Arabia was finalizing the extension of the Kingdom's $3 billion deposit to Pakistan.
Last year, Saudi Arabia deposited $3 billion in Pakistan’s central bank to help support its foreign reserves.
