Pakistan Reaches Agreement with IMF for Final Tranche of $3 Billion Bailout Package

The International Monetary Fund (IMF) has announced that a Staff-Level Agreement (SLA) has been reached with Pakistan regarding the final review of a $3 billion bailout package. According to the agreement, Pakistan is set to receive $1.1 billion pending approval from the Fund’s Executive Board.

This funding marks the last installment of a $3 billion emergency bailout secured by Pakistan last summer, which helped the country avoid a sovereign debt default. Additionally, Islamabad is currently in the process of seeking another long-term bailout from the IMF.

The agreement between Pakistan and the IMF acknowledges the significant progress made in program implementation by the State Bank of Pakistan and the caretaker government in recent months. It also recognizes the new government's commitment to ongoing policy and reform efforts aimed at transitioning Pakistan from stabilization to a strong and sustainable recovery.

Nathan Porter, the IMF mission chief in Pakistan, highlighted the improvements in Pakistan's economic and financial position since the first review. However, he noted that growth is expected to be modest this year, with inflation remaining above target. Porter emphasized the importance of continued policy and reform efforts to address Pakistan's deep-seated economic vulnerabilities.

The current government's efforts towards broadening the tax base and implementing power and gas tariff adjustments were also highlighted in the agreement. The central bank's commitment to maintaining a prudent monetary policy to lower inflation and ensure exchange rate flexibility was underscored as well.

Following the announcement, shares at the Pakistan Stock Exchange (PSX) experienced a positive trend, climbing up by 374 points.

Looking ahead, Pakistan aims to negotiate a "longer and larger" economic bailout package with the IMF, as indicated by Finance Minister Muhammad Aurangzeb. Ministerial meetings are scheduled for April, with the new finance minister expected to lead the delegation.

In summary, the agreement between Pakistan and the IMF reflects a concerted effort to address economic challenges and pave the way for sustainable growth and stability in the country.

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