Pakistan secures $3 billion bailout from International Monetary Fund
The International Monetary Fund (IMF) on Wednesday granted a much-awaited $3 billion bailout for Pakistan, a move that is likely to save the country from defaulting on its debt repayments. According to the IMF, its executive board made the decision to approve an agreement to release the funds over a period of nine months to back the nation's economic stabilization program.
Why does this story matter?
The announcement comes after the IMF and Pakistan agreed to the nine-month plan after a series of discussions with Pakistani Prime Minister Shehbaz Sharif and other officials. The bailout had been on hold since December when the IMF declined to release a $1.1 billion part of the loan due to Pakistan's failure to comply with a 2019 agreement between it and ex-PM Imran Khan.
IMF flags Pakistan's 'challenging economic juncture'
In an official release, the financial agency flagged the South Asian country's ongoing economic crisis and said, "The arrangement comes at a challenging economic juncture for Pakistan." "A difficult external environment, devastating floods, and policy missteps have led to large fiscal and external deficits, rising inflation, and eroded reserve buffers" in the fiscal year 2023," the IMF statement further read.
Pakistan PM's reaction to IMF approving $3 billion bailout
Meanwhile, the prime minister of Pakistan labeled the development a significant step in the Pakistan government's efforts to stabilize the economy and achieve stability. "This milestone, which was achieved against the heaviest of odds and against seemingly impossible deadline, could not have been possible without excellent team effort," Sharif tweeted. "It bolsters Pakistan's economic position to overcome immediate to medium-term economic challenges," added Sharif.
You can check out Sharif's post here
Know about Sharif's role in securing $3 billion IMF bailout
After a deadlock since December, a breakthrough was announced recently after the Pakistan PM met with IMF chief Kristalina Georgieva in Paris. During the meeting, they discussed the $6 billion bailout package revival amid increasing inflation and shrinking foreign exchange reserves. Notably, Pakistan's economy recorded a significant shock last summer after devastating floods killed 1,739 people and reportedly caused damages worth $30 billion.
Pakistan's finance minister expects economic improvement next month: Here's why
With the $3 billion bailout, Pakistan's Finance Minister Ishaq Dar expects the country's economy to be in a better position when the ruling Pakistan Muslim League-led government completes its tenure in August. The parliamentary polls are expected to occur in October-November, and Sharif has stated that he hopes Pakistan will be able to avoid any further loans from the IMF by domestically generating funds.
Experts reveal how IMF bailout will assist Pakistan
As per the news agency Associated Press (AP), experts believe the IMF bailout approval will assist crisis-hit Islamabad and could encourage other global financial institutions to help Pakistan overcome its current financial troubles. Reportedly, Pakistan requires at least $20 billion over the next 24 months to repay foreign loans with interest. Foreign exchange reserves fell below $4 billion earlier this year.
