IMF Releases $3 Billion in Bailout for Pakistan

The International Monetary Fund (IMF) announced a staff-level agreement with Pakistan on a $3 billion stand-by arrangement, a move long awaited by the South Asian nation on the verge of default.

The agreement, which is subject to IMF board approval in July, comes after an eight-month delay and provides some relief to Pakistan, which is dealing with an acute balance of payments crisis and declining foreign exchange reserves.

The $3 billion cash, spread over nine months, is more than Pakistan expected. The country was waiting for the final $2.5 billion of a $6.5 billion rescue package negotiated in 2019, which ended on Friday.

The new stand-by arrangement builds on the 2019 programme, said IMF official Nathan Porter in a statement on Thursday, noting that Pakistan's economy had experienced various obstacles recently, including disastrous floods last year and commodity price increases as a result of the Ukraine crisis.

"Despite the government's efforts to reduce imports and the trade deficit, reserves have fallen to extremely low levels." "Power sector liquidity conditions remain acute," Porter said in a statement.

"Given these challenges, the new arrangement would provide a policy anchor as well as a framework for future financial support from multilateral and bilateral partners."