IMF reaches agreement with Pakistan for $7 billion extended fund facility

The International Monetary Fund said on Friday it reached a staff level agreement with Pakistan for a $7 billion, 37-month loan program aimed at cementing stability and inclusive growth in the crisis-plagued South Asian country.

The IMF said the new Extended Fund Facility program is subject to be approved by its Executive Board and obtain "timely confirmation of necessary financing assurances from Pakistan's development and bilateral partners."

This would include rollovers or disbursments on loans from Pakistan's long-time allies Saudi Arabia, the United Arab Emirates and China.


The deal caps negotiations that started in May after Islamabad completed a short-term, $3 billion program that helped stabilize the economy and helped avert a sovereign debt default.

"The program aims to capitalize on the hard-won macroeconomic stability achieved over the past year by furthering efforts to strengthen public finances, reduce inflation, rebuild external buffers and remove economic distortions to spur private sector led growth," IMF Pakistan Mission Chief Nathan Porter said in a statement.

Pakistan's Minister of State for Finance, Revenue and Power Ali Pervaiz Malik told Reuters last week that Pakistan had been aiming for a new loan deal before the IMF Executive Board takes its annual recess in August. The IMF's statement did not include any details on timing of board consideration of the deal.

To prepare for the program, Pakistan announced an ambitious tax revenue target of 13 trillion rupees ($47 billion) for the fiscal year that began on July 1, a near-40% jump from the prior year.

Pakistan has been plagued by crippling boom-and-bust cycles for decades, leading to 22 IMF bailouts since 1958 and is currently the IMF's fifth-largest debtor, owing $6.28 billion as of July 11 according to IMF data.