IMF promises Pakistan ‘immediate’ release of $1.1bn loan after key meet

Pakistan seeks another long-term IMF programme to support its ailing economy but experts say the focus must be on reforms.

Islamabad, Pakistan – Cash-strapped Pakistan is poised to receive a $1.1bn loan tranche from the International Monetary Fund (IMF) after a key meeting of the international lender’s executive board on Monday, even as economists have warned that the country needs deep reforms to reduce its dependence on overseas financial assistance.

Late on Monday night, Pakistan’s Ministry of Finance and the IMF confirmed that the lender had approved the “immediate disbursement” of a $1.1bn tranche that completes a total loan of $3bn agreed to under a deal inked last year.

But the approval came with firm words from the IMF. “To move Pakistan from stabilization to a strong and sustainable recovery the authorities need to continue their policy and reform efforts, including strict adherence to fiscal targets while protecting the vulnerable; a market-determined exchange rate to absorb external shocks; and broadening of structural reforms to support stronger and more inclusive growth,” the organisation said in a statement.

The bailout announced on Monday followed a meeting between Pakistani Prime Minister Shehbaz Sharif and IMF Managing Director Kristalina Georgieva, on the sidelines of the World Economic Forum meeting in Riyadh on Sunday.

Sharif’s government had sought a new IMF deal after the current $3bn standby arrangement (SBA) with the global lender expired on April 11.

Pakistan has been reeling from a severe economic crisis for more than two years, with its inflation at one point shooting up to nearly 38 percent and its foreign currency reserves depleted to $3bn in February 2023, enough to cover less than five