Pakistan receives letter of intent from IMF for resumption of loan program

In this file photo, the International Monetary Fund (IMF) building sign is viewed in Washington DC on April 5, 2016. (AFP/File) Short Url https://arab.news/r6twz

• The executive board of the international lending agency is expected to take up Pakistan’s case later this month
• The IMF board will consider the possibility of increasing $1 billion to the loan facility, extend its tenure for a year

ISLAMABAD: Pakistan has received a letter of intent (LOI) from the International Monetary Fund (IMF) for the revival of a loan program that originally amounted to $6 billion, reported the local media on Saturday, adding the global lender was likely to release the next tranche by the end of this month.
Faced with a rising current account deficit and depleting foreign exchange reserves, Pakistan has been striving for the resumption of the loan facility that was stalled after the previous administration of ousted prime minister Imran Khan reneged on its terms and conditions by subsidizing fuel and energy prices.
The two sides reached a staff-level agreement on July 13 to resume the program, though it was announced that the IMF board was tentatively scheduled to convene its meeting after the country received adequate financing assurances from other sources to meet its external financial obligations.
Pakistan’s finance minister Miftah Ismail confirmed while talking to Dawn newspaper that the letter of intent had been received on Friday.
“We are going through the LOI, would sign and send [it] back to the IMF anytime soon and look forward to (executive) board meeting later this month for approval,” he said.
The newspaper also reported that the IMF executive board would meet on August 29 to discuss Pakistan’s case for approval of the completion of seventh and eighth reviews under the loan program, besides considering the possibility of increasing $1 billion to its size and the extending its tenure to August 2023.
“The move follows the completion of the $4 billion in bilateral financing from four friendly nations and would pave the way for an immediate disbursement, expected to be in Pakistan’s account before the end of working hours on August 31,” the newspaper said.
Pakistan’s acting central bank governor announced last week the country would soon bridge the external financing gap of $4 billion, though he did not share a timeline.