The International Monetary Fund (IMF) has finalized a staff-level agreement with Pakistan on the first review of a $3 billion bailout program. However, the IMF’s Executive Board will release $700 million to Pakistan, following an initial disbursement of $1.2 billion.
The review, part of a nine-month standby arrangement (SBA), was aimed at supporting Pakistan’s economic stabilization and was conducted from November 2 to 10.
Nathan Porter, leading the IMF team in Islamabad, highlighted the nascent recovery in Pakistan’s economy, bolstered by international support and improved fiscal measures. The IMF acknowledged Pakistan’s efforts in executing its FY24 budget and adjusting energy prices. However, Porter noted that while inflation is expected to decline, Pakistan remains vulnerable to external risks, including geopolitical tensions and global financial conditions. Under the SBA, strengthening macroeconomic sustainability and promoting balanced growth remain key priorities.
Meetings and Acknowledgements
The IMF’s statement followed Porter and Esther Perez Tuiz, IMF Resident Representative for Pakistan, meeting with interim Prime Minister Anwaarul Haq Kakar. They discussed the SBA’s first review and acknowledged the efforts of the Pakistani government in meeting quarterly targets. Prime Minister Kakar reiterated the government’s commitment to reforms, emphasizing their importance for Pakistan’s long-term economic stability.
IMF Managing Director Kristalina Georgieva anticipated the release of the second tranche of funds and credited the Pakistani authorities for adhering to the program.
Senator Raza Rabbani criticized the IMF’s direct communication with Pakistan’s key partners over fund pledges, describing it as a treatment of Pakistan as a “client state.” The IMF’s involvement in confirming bilateral support, including rollovers and additional flows from partners, has raised questions about the sovereignty of Pakistan’s economic decisions.”