IMF agrees to resume Pakistan loan program, to distribute $1.2 bn in August: Report

Pakistan has reportedly reached a staff-level agreement with the International Monetary Fund to resume its loan program.

Bloomberg, quoting officials, claimed that a $1.2 billion disbursement is expected in August after IMF management gives its final approval. The lender has also agreed to increase the loan program size by $1 billion -- taking it to a total $7 billion -- and extend it through June 2023, Bloomberg further added.

Pakistan desperately needs the money to avert a balance of payment crisis that is being brought closer by the day as a result of the sharp rise in global oil and commodity prices.


According to Bloomberg, Pakistan's foreign-exchange reserves can now cover less than two months of imports. Inflation in the country has also accelerated to a 13-year-high. Needing to get back in the IMF's good graces, the new government, led by Shehbaz Sharif, has removed the subsidies, and made adjustments in a budget presented on June 10 that aimed at reducing the government's fiscal deficit, which was one of the IMF's key requirements. The Shehbaz Sharif has recently raised electricity tariffs and almost doubled diesel pump prices over the past two months to meet IMF conditions.

Pakistan entered a $6 billion IMF programme in 2019 spread over three years and three months, but with less than half the amount disbursed the IMF suspended the bailout earlier this year after the previous prime minister, Imran Khan, announced unfunded subsidies for the oil and power sectors. Khan's government was ousted in April.