IMF reaches staff-level agreement with Pakistan to release US$1.17 bn

WASHINGTON: The International Monetary Fund (IMF) and Pakistan have reached a staff-level agreement for the release of US$1.17 billion under the combined 7th and 8th reviews of Pakistan’s Extended Fund Facility (EFF).

A statement issued by the Fund said that the agreement is subject to approval by the IMF’s Executive Board.

“Additionally, in order to support program implementation and meet the higher financing needs in FY23, as well as catalyze additional financing, the IMF Board will consider an extension of the EFF until end-June 2023 and an augmentation of access by SDR 720 million that will bring the total access under the EFF to about US$7 billion.”

Pakistan and IMF have reached an agreement. We will soon receive $1.17b as the combined 7th & 8th tranche. I want to thank the PM, my fellow ministers, secretaries and especially the finance division for their help and efforts in obtaining this agreement. https://t.co/376sCHLc1Y

— Miftah Ismail (@MiftahIsmail) July 14, 2022

Last month, Pakistan received the Memorandum of Economic and Financial Policies (MEFP) from the International Monetary Fund (IMF) for the seventh and eighth reviews.

Read More: PAKISTAN COULD RECEIVE $2BN FROM IMF, SAYS PM SHEHBAZ

This was confirmed by Finance Minister Miftah Ismail on his official Twitter handle. The MEFP is a document that contains details regarding striking a staff-level agreement.

Pakistan, IMF talks

Pakistan unveiled a 9.5 trillion rupee ($47 billion) budget for 2022-23 last month aimed at tight fiscal consolidation in a bid to convince the IMF to restart much-needed bailout payments.

However, the lender later said additional measures were needed to bring Pakistan’s budget in line with the key objectives of the IMF programme.

The two sides held several meetings and agreed on the budget and fiscal measures.

Pakistan had sought an increase in the size and duration of the programme when Ismail met with IMF officials in Washington in April.

Pakistan entered the IMF programme in 2019, but only half the funds have been disbursed to date as Islamabad has struggled to keep targets on track.

The last disbursement was in February and the next tranche was to follow a review in March, but the government of ousted prime minister Imran Khan introduced costly fuel price caps which threw fiscal targets and the programme off track.

Pakistan’s new government has removed the price caps, with fuel prices going up at the pump by up to 70% in a matter of three weeks.