The International Monetary Fund’s (IMF) Executive Board will vote later today on a short-term $3 billion bailout program for Pakistan.
The cash-strapped country on 30 June received approval for the nine-month arrangement under the lender’s $3 billion Standby Agreement (SBA), easing fears of default and recovering bond yields which offered more confidence to international investors.
Pakistan was anticipating the release of the remaining $2.5 billion from a $6.5 billion bailout package that was agreed upon in 2019. However, the package expired on Friday (30 June), as the ninth review could not be completed.
The new program is 9 months long and ensures funding of $3 billion during the period. If approved, forex reserves held with the State Bank of Pakistan would rise substantially. With this week’s surprising inflows of $2 billion from the Kingdom of Saudi Arabia, today’s vote on Pakistan’s case by the IMF Board could propel SBP reserves above $7 billion.
With general elections scheduled for October, the administration has been scrambling to address the country’s economic difficulties and has increased attempts to meet IMF conditions, such as hiking taxes and energy prices and slashing fiscal expenditure.
Due to difficulties in executing reforms and getting creditors to agree during a political crisis, Pakistan is the third South Asian country to secure an IMF bailout.
Source: Pro Pakistani
