Pakistan, IMF Finalize $1.1 Billion Disbursement

Pakistan and the International Monetary Fund have concluded a staff-level review of a $3 billion standby arrangement which, if approved, will disburse $1.1 billion for the South Asian economy, two officials involved in the talks said.

The funds are the final tranche of a last-gasp rescue package Pakistan had secured last summer, which averted a sovereign debt default.

The IMF mission held meetings with Pakistani officials in Islamabad during a five-day visit to review the fiscal consolidation benchmarks set for the loan.

Both sides concluded the second and last review late on Tuesday, the officials said, adding that the IMF will state the outcome on Wednesday.

The officials declined to be named as details about the talks remained confidential. A finance ministry spokesman, and the local IMF office, did not respond to requests for a comment.

Pakistan’s Finance Minister Muhamad Aurangzeb has said that Islamabad will seek another IMF bailout after the short-term standby arrangement ends on April 11.

The global lender has said it will formulate a medium-term programme if Islamabad applies for one.

The government has not officially stated the size of the additional funding it is seeking through a successor programme, however, Bloomberg reported in February that Pakistan planned to seek a new loan of at least $6 billion from the lender.

The debt-ridden economy, which shrank 0.2% last year and is expected to grow around 2% this year, has been under extreme stress with low reserves, a balance of payment crisis, inflation at 23%, policy interest rates at 22%, and record depreciation of the local currency.

Ahead of the stand-by arrangement, Pakistan had to meet IMF conditions including revising its budget, raising interest rates, generating revenues through more taxes and raising the price of electricity and gas, which fuelled inflation.

(Reuters)