IMF approves Pakistan bailout to avert default in near term

ISLAMABAD: Pakistan has secured a bailout from the International Monetary Fund (IMF) to avert an imminent default as political turmoil and deadly flooding threaten the South Asian nation’s economy.

The country can withdraw 894 million of the IMF’S special drawing rights, the Washington-based lender said in a statement on its website. That’s the equivalent of about Us$1.16bil (Rm5.2bil).

The funds will be key to stabilising Pakistan’s economy after surging energy costs eroded the nation’s foreign-exchange reserves and stoked Asia’s second-fastest inflation.

The nation needs Us$31bil (Rm139bil) in total financing through June 2023, while it is projected to have secured Us$38bil (Rm170bil). The IMF decision will also pave the way for more aid from friendly nations.

“The immediate priority is to continue the steadfast implementation of the recently approved budget for fiscal 2023, adherence to a market-determined exchange rate, and pursuit of a proactive and prudent monetary policy,” the fund said.

It added that the executive board also approved Pakistan’s request for waivers of non-observance of performance criteria.

Pakistan has had a tumultuous track record with the IMF. The government secured a bailout programme in 2019 only to have it stall several times due to Islamabad’s failure to meet some loan conditions.

Prime Minister Shehbaz Sharif’s government, since taking office in April, has reversed energy subsidies, imposed fresh taxes and unveiled austerity measures to avert what would be the second default in Asia this year after Sri Lanka.