ISLAMABAD: Pakistani authorities and the International Monetary Fund (IMF) have reached a staff-level agreement to complete the sixth review of a $6 billion loan program that allows the release of more than $1 billion loan to the South Asian nation, the global lender said on Monday.
In 2019, Pakistan reached an accord with the IMF for a three-year $6 billion bailout package, aimed at shoring up fragile public finances and strengthening a slowing economy.
Five reviews of the program had been completed by March. The sixth was pending since June this year, which would enable Pakistan to receive more than $1 billion from the fund. Pakistani and IMF officials had been engaged in talks from October 4 to November 18 to finalize the release.
“The agreement is subject to approval by the Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms,” the IMF said in a statement.
“Completion of the review would make available SDR 750 million (about $1,059 million), bringing total disbursements under the EFF (Extended Funds Facility) to about $3,027 million and helping unlock significant funding from bilateral and multilateral partners. An additional SDR 1,015.5 million (about $1,386 million) was disbursed in April 2020 to help Pakistan address the economic impact of the COVID-19 shock.”
The IMF acknowledged that Pakistan continued to make progress in implementing the EFF-supported program “despite a difficult environment.”
“All quantitative performance criteria (PCs) for end-June were met with wide margins, except for that on the primary budget deficit,” it said.
“Notable achievements on the structural front include the finalization of the National Socio-Economic Registry (NSER) update, parliamentary adoption of the National Electric Power Regulatory Authority (NEPRA) Act Amendments, notification of all pending quarterly power tariff adjustments, and payment of the first tranche of outstanding arrears to independent power producers (IPPs) to unlock lower capacity payments fixed in renegotiated power purchase agreements (PPAs).”
The global lender also said Pakistan made progress in improving the anti-money laundering and combating the financing of terrorism (AML/CFT) framework, although some additional time was needed to strengthen its effectiveness.