The International Monetary Fund (IMF) announced on Thursday that it had reached a preliminary agreement with Pakistan to revive a $6 billion bailout package for Pakistan, a predominantly Muslim nation that has been hit by a serious economic crisis since last year. Pakistan is currently in a state of extreme poverty.
The agreement between Pakistan and the IMF was first inked in 2019. However, the delivery of a tranche that was little more than one billion dollars has been put on hold since the beginning of this year. When this occurred, the International Monetary Fund voiced concerns on Pakistan’s compliance with the terms of the bailout under the previous Prime Minister, Imran Khan. Khan was removed from office in April as a result of a vote of no confidence in his leadership.
Since May, the newly elected Prime Minister Shahbaz Sharif’s administration has been in discussions with the International Monetary Fund (IMF) in an effort to avert a default similar to the one that Sri Lanka experienced.
According to a post that Sharif made on Twitter, he said that “the Agreement with the Fund has set the scene to pull nation out of its economic challenges.”
In order to satisfy the requirements set out by the IMF, the government of Pakistan has, over the course of the last several weeks, increased gasoline prices and reduced subsidies for electricity and natural gas. Because of this, the government has a very low approval rating, although Sharif maintains that the steps were essential.
The fund said on Thursday that it has “reached a staff-level agreement (SLA) with the Pakistan authorities.” This was stated in a statement. In addition, the agreement is “subject to ratification by the IMF’s Executive Board,” according to the statement.
It was said that Pakistan would be qualified to receive an essential portion of around 1.17 billion dollars.
According to the statement, the International Monetary Fund (IMF) would increase the sum of the bailout from $6 billion to $7 billion, pending approval from the IMF’s executive board, which is often regarded a formality.
The former Finance Minister Miftah Ismail criticised Khan for creating a scenario in Pakistan that was similar to the one in Sri Lanka. He also alleged that Khan had intentionally breached the terms set down by the IMF in order to maintain his popularity.
On Thursday, Sharif said in a video message that he would be lowering the rates of petrol and diesel by up to 15 percent. He stated that this step was made possible by the decrease in the price of oil on the worldwide market.
According to a number of analysts, the restoration of the IMF’s bailout programme would assist the government in overcoming the economic crisis. This is due to the fact that the release of instalments of loans from the fund will inspire other international financial institutions to interact with Pakistan.
According to the authorities, Sharif’s administration has made a request for assistance from Washington in order to revive the IMF bailout. Khan has often claimed, since he was removed from power, that his administration was overthrown as a result of a scheme hatched in the United States, which the United States government has categorically denied.