Pakistan secures final IMF approval for $3 billion bailout: Bloomberg
The IMF executive board on Wednesday approved a nine-month stand-by arrangement to support the country's economic stabilisation program, the Washington-based institution said in a statement.
The move allows for an immediate disbursement of about $1.2 billion, reports Bloomberg.
After months of delays, the South Asian country made an all-out effort to win an IMF deal to avert a sovereign default, steps that included raising interest rates in an emergency meeting and increasing taxes. Fitch Ratings upgraded the nation's credit score this week. Pakistan's stock market and dollar bonds have rallied in the run-up to the deal.
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Pakistan must implement policies such as "greater fiscal discipline, a market-determined exchange rate to absorb external pressures" and other reforms on energy and business policies in order to make the loan program successful, the IMF said.
The country has $25 billion of debt repayments due in the fiscal year starting this month, according to Moody's Investors Service. That's more than five times its foreign-exchange reserves, which stood at $4.5 billion at the end of June.
Prime Minister Shehbaz Sharif sealed the new bailout program after holding hour-long phone calls and several meetings with IMF Managing Director Kristalina Georgieva.
The IMF loan unlocks billions of dollars from other nations. Saudi Arabia gave Pakistan a $2 billion deposit and the United Arab Emirates gave $1 billion this week after the initial IMF assurance. The deal will also help the country's transition to a newly elected administration later this year.
The approval "bolsters Pakistan's economic position to overcome immediate- to medium-term economic challenges," Sharif said in a Twitter post.
