Pakistan and the International Monetary Fund (IMF) have agreed, in principle, to extend the stalled bailout program by up to one year and increase the loan size to $8 billion, giving markets the much-needed stability and breathing space for the new government, the media reported.
The understanding has been reached between Pakistan Finance Minister Miftah Ismail and IMF Deputy Managing Director Antoinette Sayeh in Washington, sources told The Express Tribune on Sunday.
Subject to the final modalities, the IMF has agreed that the program will be extended by another nine months to one year as against the original end period of September 2022, the sources added.
The size of the loan would be increased from the existing $6 billion to $8 billion — a net addition of $2 billion, a senior government functionary requesting anonymity said.
The previous PTI-led government and the IMF had signed a 39-month Extended Fund Facility (July 2019 to September 2022) with a total value of $6 billion. However, the previous government failed to fulfill its commitments and the program remained stalled for most of the time as $3 billion remained indisbursed.
Before taking Pakistan’s case to the IMF Board for approval, Islamabad would have to agree on the budget strategy for the next fiscal year 2022-23, the sources said.
Also, the government of Prime Minister Shehbaz Sharif would have to demonstrate that it would undo some wrong steps taken by the former regime against the commitments that it gave to the IMF Board in January this year.
Pakistan is passing through a phase of political and economic uncertainty and the decision to stay in the IMF program for longer than the original period would bring clarity in economic policies and soothe the rattling markets, Express Tribune reported.