Pakistan agrees with the IMF an aid program worth 2,760 million euros

June 30 (EUROPA PRESS) –

The Government of Pakistan has reached a preliminary agreement with the International Monetary Fund (IMF) for an aid program worth 3,000 million dollars (about 2,760 million euros), after several months of tough negotiations and at a time in which the Central Asian country is close to the risk of ‘default’ due to the serious economic crisis it is going through.

The head of the IMF delegation that has participated in the negotiations, Nathan Porter, has detailed that it is “an agreement with the Pakistani authorities on a nine-month Stand By Agreement (SBA) worth about 3,000 million dollars, which account for 111 percent of Pakistan’s quota in the IMF,” according to a statement published by the agency through its website.

Thus, he explained that “the new SBA is based on the efforts of the authorities under the support of the 2019 Expanded Service Fund (EFF), which expires at the end of June”, before adding that “this agreement is still subject to the approval of the Executive Board of the IMF”. “He is expected to consider this request in mid-July,” Porter said.

“Since the combined seventh and eighth reviews under the 2019 EFF were completed in August 2022, the economy has been subjected to various external shocks, including the catastrophic floods of 2022, which impacted the lives of millions of Pakistanis, and a rise in international commodity prices because of Russia’s war in Ukraine,” he said.

In this sense, he has argued that “as a result of these shocks and some political errors, including the few limitations on the operation of the foreign exchange market, economic growth has stagnated.” “Inflation, including for basic products, is very high. Despite the authorities’ efforts to reduce imports and the trade deficit, reserves have fallen to very low levels,” he pointed out.

“Liquidity conditions in the energy sector are also dire, with a growing increase in arrears and frequent face disconnections. Faced with these challenges, the new SBA will provide a political anchor and a framework for financial support from partners. multilateral and bilateral efforts for the next stage. The authorities have already taken a number of important actions for the new programme,” Porter said.

Thus, he has detailed that the Pakistani Parliament has already approved a budget “in line with the objectives of supporting fiscal sustainability and mobilizing revenue”, before abounding that a “full” application of the program is “key to its success, given the difficult challenges”. “The IMF team wants to thank the authorities for the open and constructive dialogue and their collaboration, which have led to this successful conclusion,” he added.

The 3 billion dollar package is larger than expected by Pakistan, which was waiting for the release of the remaining 2.5 billion dollars (about 2.3 billion euros) of a 6.5 billion dollar rescue package (about 5.985 billion euros). euros) agreed in 2019, which expires this Friday.

Following the IMF announcement, the Pakistani Information Minister, Marriyum Aurangzeb, has indicated through her account on the social network Twitter that the Prime Minister, Shehbaz Sharif, and the Finance Minister, Ishaq Dar, will give this afternoon an “important press conference” to give details about the agreement.

Likewise, Dar himself has given “thanks to God” after the agreement, while the head of the Planning portfolio, Ahsan Iqbal, has said that it is “good news”, at the same time that he has advocated applying the pact to “make that the economy be strong and sustainable throughout its development to its full potential”.