The International Monetary Fund (IMF) has announced that its executive board has approved a significant $3 billion bailout program for Pakistan, of which $1.2 billion will be disbursed immediately to help the cash-strapped country. The global lender’s announcement on Wednesday comes just weeks after the IMF and Pakistan reached a standby arrangement on June 29 to ease the country’s financial crisis, Dawn News reported.
In a statement released late on Wednesday, the IMF said: “The IMF’s Executive Board approved a nine-month Stand-by Arrangement (SBA) for an amount of approximately $3 billion, or 111 per cent of the quota, to support Pakistan.” given.” Government economic stabilization program. “A difficult external environment, devastating floods and policy missteps led to large fiscal and external deficits, rising inflation and shrinking reserve buffers in FY2013.”
Responding to the development, Prime Minister Shehbaz Sharif said the bailout was a major step in efforts to stabilize the economy, reports the BBC. “It strengthens Pakistan’s economic position to overcome immediate to medium-term economic challenges, providing financial leeway for the next government to move forward,” he added. Earlier this week, Pakistan also received $2 billion in funding from Saudi Arabia and $1 billion from the United Arab Emirates.
The IMF deal came after eight months of tough negotiations on how to deal with serious long-term issues with Pakistan’s ailing economy. The beleaguered country was on the verge of being unable to repay the loans to the creditors. Last year, much of the country was affected by devastating floods, adding to other major problems facing the country, including high inflation and economic mismanagement by successive governments.
As per a BBC report, the cost of living in Pakistan is on the rise. The official annual rate of inflation is currently around 30 per cent. Last month, the State Bank of Pakistan raised its key interest rate to a record high of 22 per cent as it struggled to curb rising prices. This week’s bailout is the latest in a long series of IMF support for Pakistan. It has taken more than 20 loans from international lenders since 1958.