The International Monetary Fund (IMF) and Pakistan have reached a staff-level agreement following the conclusion of final talks today, paving the way for releasing a $1.1 billion tranche under the Stand-By Agreement (SBA).
The agreement is contingent upon approval by the IMF Executive Board.
This disbursement represents the final instalment of bailout funds secured by crisis-stricken Pakistan last year, aimed at averting a debt default. The IMF’s recent mission to Pakistan involved a five-day visit during which it met with Pakistani officials to assess progress against the fiscal consolidation benchmarks outlined in the loan agreement.
The IMF recognized improvements in Pakistan’s economic and financial outlook since the first review, noting continued growth and restoring confidence. However, it cautioned that Pakistan’s growth outlook 2024 is modest, with inflation persisting above target. It stressed the necessity for ongoing policy adjustments and reforms to address economic vulnerabilities amidst persistent challenges posed by high external and domestic financing needs and an uncertain external environment.
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The IMF affirmed the commitment of the new government to maintain policies initiated under the current program with the IMF, aimed at enhancing economic and financial stability throughout the remainder of the year.
Authorities in Pakistan are focused on achieving the fiscal year 2024 general government primary balance target, broadening the tax base, and implementing adjustments to power and gas tariffs to mitigate the accumulation of circular debt.
Additionally, Pakistan has expressed interest in securing a medium-term fund facility, with authorities aiming to address fiscal and external sustainability weaknesses, bolster economic recovery, and lay the groundwork for robust, sustainable, and inclusive growth through a successor medium-term Fund-supported program.
