IMF comes to agreement with Pakistan on terms to revive USD 6 billion funding programme

The United Nations (UN) International Monetary Fund (IMF) said that it has reached an agreement with Pakistan on terms to help revive a $6 billion funding programme for the nation. In an official statement, the international financial institution said that it had reached a staff-level agreement with Pakistani authorities considering the policies and reforms required to complete the sixth review under the $6 billion Extended Fund Facility (EFF). IMF noted that EFF has been “in recess” since April. 

"The agreement is subject to approval by the Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms," IMF's statement read.

"Completion of the review would make available (Special drawing rights) SDR 750 million (about US$1,059 million), bringing total disbursements under the EFF to about US$3,027 million and helping unlock significant funding from bilateral and multilateral partners. An additional SDR 1,015.5 million (about US$1,386 million) was disbursed in April 2020 to help Pakistan address the economic impact of the COVID-19 shock," it added.

$6 billion funding programme was halted this year

The latest $6 billion funding programme dates back to 2019 but the funding was halted this year due to reform issues budding in Pakistan. The revival of the programme is subject to “finalization of the National Socio-Economic Registry (NSER) update, parliamentary adoption of the National Electric Power Regulatory Authority (NEPRA) Act Amendments, notification of all pending quarterly power tariff adjustments, and payment of the first tranche of outstanding arrears to independent power producers (IPPs) to unlock lower capacity payments fixed in renegotiated power purchase agreements (PPAs),” stated IMF.

The authorities at IMF, in the official release, stressed the necessity to tackle inflation, safeguard exchange flexibility rate and also fortify international reserves. ANI stated that recently, Pakistan has been facing a range of issues including currency devaluation, high inflation and a current deficit while investors have become nervous about the outcome of the talks between the government and the IMF.

The agency informed that discussions with Pakistani authorities were led by IMF Mission Chief to Pakistan, Ernesto Ramirez Rigo virtually from 4 October to 18 November in the context of the 2021 Article IV consultations and the sixth review of the authorities’ reform program supported by the IMF’s Extended Fund Facility (EFF).

(IMAGE: AP)