Pakistan, IMF agree on $5.3 billion bailout package
The government of Pakistan Thursday agreed to a $5.3 billion loan deal with International Monetary Fund (IMF) to boost its foreign exchange reserves, fight an acute energy crisis, and prop up depreciating rupee.
“The government of Pakistan and International Monetary Fund have reached an agreement for a three-year programme of at least 5.3 billion dollars under an extended fund facility,” said Finance Minister Ishaq Dar.
“This is a Pakistan designed programme. It includes bringing the fiscal deficit to a more sustainable level,” Jeffrey Franks, the regional adviser to the Fund on Pakistan, told reporters speaking alongside the Pakistani finance minister.
The IMF expects Pakistan to reach a budget deficit target of six per cent of gross domestic product as part of its bailout loan programme, said Franks.
The floating interest rate would be set at three per cent and that the loan would be payable over a longer period than conventional stand-by arrangements, he added.
Franks said the loan was subject to further approval within the IMF and would then go to the executive board in early September.
The successful conclusion of talks comes at a time when Pakistan’s central bank has only about .
25 billion left in reserves, enough to cover less than six weeks of imports.
Dar said there was no option but request the loan to save Pakistan from defaulting.
“We have not carried the begging bowl in our hands nor are we getting a grant, Pakistan is a member of IMF,” Dar said.
