IMF reaches staff-level agreement to release $1.17 billion in funds for Pakistan

In order to meet higher financing needs, the IMF board will also consider an extension of the EFF until the end of June 2023, and an addition of nearly $1 billion that would bring total access under the program to about $7 billion, it said.

“Pakistan is at a challenging economic juncture,” Nathan Porter, who headed the IMF team, said in a statement, citing the difficult external environment and domestic policies that fueled demand to unsustainable levels.

“The resultant economic overheating led to large fiscal and external deficits in FY22, contributed to rising inflation, and eroded reserve buffers,” he added.

Agreed policy priorities included steadfast implementation of the fiscal 2023 budget, which aimed to reduce the government’s large borrowing needs and boost revenues by targeting higher-income taxpayers while protecting development spending, Porter said.

Pakistan also needed to catch up on power sector reforms, engage in proactive monetary policy to guide inflation to more moderate levels, and work to reduce poverty.

The country’s finance minister told broadcaster Geo earlier that the talks with the IMF had concluded, and an announcement was expected soon.

Pakistan entered the IMF program in 2019, but only half the funds have been disbursed to date as Islamabad has struggled to keep on track to meet targets.