IMF bailout will help strengthen Pakistan's foreign exchange reserves: PM Shehbaz Sharif

Islamabad: After Pakistan signed a staff-level agreement on a "standby arrangement" for nine months, contributing to Pakistan's economic stability, Prime Minister Shehbaz Sharif expressed his appreciation on Friday, ARY News reported.

The signing of a USD 3 billion Stand-By Arrangement, according to PM Shehbaz Sharif in a tweet, will help to bolster Pakistan's foreign exchange reserves. He said that it would enable Pakistan to attain economic stability, and set Pakistan on the path of sustained economic progress. "Alhamdulillah, I am pleased to announce that Pakistan has reached a Staff-Level Agreement with the IMF on a nine-month USD3 billion Stand-By Arrangement," Shehbaz Sharif tweeted.

"This Arrangement will help strengthen Pakistan's foreign exchange reserves, enable Pakistan to achieve economic stability, and put the country on the path of sustainable economic growth, Insha'Allah. I would like to appreciate the efforts and hard work of Finance Minister @MIshaqDar50 and his team at the Ministry of Finance for achieving this outcome. I would also like to thank MD IMF @KGeorgieva and her team at the IMF for their cooperation and collaboration, especially during the course of last week," he added.

Earlier today, Pakistan and the International Monetary Fund (IMF) reached a staff-level agreement (SLA) of USD 3 billion, and the global lender announced a sight of relief for the cash-strapped country.

The decision came after the IMF staff team led by Nathan Porter held in-person and virtual meetings with the Pakistani Authorities under an IMF Stand-by Arrangement (SBA).

The USD 3 billion funding, spread over nine months, is higher than expected for Pakistan. The country was awaiting the release of the remaining USD 2.5 billion from a $6.5 billion bailout package agreed in 2019, which expires on Friday (today).

With sky-high inflation and foreign exchange reserves barely enough to cover one month of controlled imports, Pakistan has been facing its worst economic crisis in decades, which analysts say could have spiralled into a debt default in the absence of the IMF deal.

IMF also pointed out that since the completion of the combined seventh and eighth reviews under the 2019 Extended Fund Facility (EFF) in August 2022, Pakistan's economy has faced several external shocks such as the catastrophic floods in 2022 that impacted the lives of millions of Pakistanis and an international commodity price spike in the wake of Russia's war in Ukraine, according to the statement of IMF's mission chief to Pakistan.

The deal comes after an eight-month delay and offers some respite to Pakistan, which is battling an acute balance of payments crisis and falling foreign exchange reserves.