Pakistan, IMF reach staff-level deal to release $1.1bn from bailout package

The funds are the final tranche of a $3bn programme agreed upon last year to avert a default, as Islamabad seeks another long-term bailout.

Islamabad, Pakistan – Pakistan and the International Monetary Fund (IMF) have reached a staff-level agreement for the release of $1.1bn from a $3bn bailout package the indebted country needed to avert a sovereign default.

“The IMF team has reached a staff-level agreement with the Pakistani authorities on the second and final review of Pakistan’s stabilisation programme,” the IMF said in a statement on Wednesday.

The United States-based lender said the money will be disbursed after approval by the IMF’s executive board before the deal, agreed last year, expires on April 11.

The announcement came after five days of talks between the IMF and the newly elected government of Prime Minister Shehbaz Sharif in Islamabad.

The IMF said Pakistan’s “economic and financial position has improved” in recent months, but added that growth is “expected to be modest this year and inflation remains well above target” and the South Asian country will need more policy reforms to address “deep-seated economic vulnerabilities”.

Pakistan is desperately seeking financial assistance from global lenders and bilateral partners to shore up its $350bn economy, which has been under severe strain for two years.

Its economy is particularly burdened by debt obligations, which amount to more than $130bn of external debt. The foreign reserves are a paltry $8bn, enough to cover eight weeks of imports in a country that relies on imported goods to fuel its economy.

Meanwhile, inflation, despite a gradual decline, is still at 23 percent, as the currency has lost more than 50 percent of its value against the US dollar in