Staff level agreement on economic policies could be supported by a 39-month Extended Fund Arrangement
ISLAMABAD: The government has struck a deal with the International Monetary Fund (IMF) on a bailout package for about $6 billion over the next three years to meet foreign debt obligations, PM’s Adviser on Finance Dr Abdul Hafeez Shaikh announced on Sunday.
Foreign loans have exceeded $90 billion, and exports have registered a negative growth over the past five years, sheikh said while speaking to state-run Pakistan Television (PTV).
“So Pakistan will get $6 billion from the IMF, and in addition we will get $2 to $3 billion from the World Bank and Asian Development Bank in next three years,” he said.
“The trade deficit reaches $20 billion and our foreign exchange reserves dipped by 50 per cent in past two years. So we have a $12 billion gap in our annual payments and we don’t have capacity to pay them,” the senior official said.
A government report out Friday said that the country’s growth rate is set to hit an eight-year low.
The report by National Accounts Committee forecast growth of a mere 3.3 per cent in the current fiscal year against a projected target of 6.2 per cent.
The staff level agreement on economic policies, which could be supported by a 39-month Extended Fund Arrangement (EFF), is aimed to support Pakistan’s strategy for stronger and more inclusive growth by reducing domestic and external imbalances, removing impediments to growth, increasing transparency, and strengthening social spending, said a statement issued on IMF‘s official website.
“An ambitious structural reform agenda will supplement economic policies to rekindle economic growth and improve living standards,” the statement read, adding that, “Financing support from Pakistan’s international partners will be critical to support the authorities’ adjustment efforts and ensure that the medium-term program objectives can be achieved.”
Led by its Washington-based mission chief Ernesto Rigo, an IMF team visited Islamabad from April 28 to May 11. The visit was originally scheduled to end on May 10, however, Rigo stayed in Pakistan for one more day to conclude the deal.
“This agreement is subject to IMF management approval and to approval by the Executive Board, subject to the timely implementation of prior actions and confirmation of international partners’ financial commitments,” Rigo said in a statement.
“The EFF aims to support the authorities’ ambitious macroeconomic and structural reform agenda during the next three years. This includes improving public finances and reducing public debt through tax policy and administrative reforms to strengthen revenue mobilisation and ensure a more equal and transparent distribution