IMF reaches staff level agreement with Pakistan to disburse $1.1 bln

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The International Monetary Fund today said it had reached a staff level agreement with Pakistan, which if approved by its board, will disburse $1.1 billion for the indebted South Asian economy also saddled with a balance of payment crisis.

The funds are the final tranche of a $3 billion last-gasp rescue package Pakistan secured last summer, which averted a sovereign debt default. Islamabad is also seeking another long-term bailout.

“The IMF team has reached a staff-level agreement with the Pakistani authorities on the second and final review of Pakistan’s stabilization program,” the IMF said in a statement.

“This agreement is subject to approval by the IMF’s Executive Board,” it added. The agreement expires on April 11 and while Pakistan has yet to be added to the IMF’s executive board’s calendar, officials say board approval is expected sometime in April.

The deal comes after the IMF mission held five days of talks with Pakistani officials to review the fiscal consolidation benchmarks set for the loan.

“Pakistan’s economic and financial position has improved in the months since the first review, with growth and confidence continuing to recover on the back of prudent policy management and the resumption of inflows from multilateral and bilateral partners,” the IMF said.

However, growth is expected to be modest this year and inflation remains well above target, as Pakistan needs more policy reforms to address its “economic vulnerabilities”, the lender added.

Most Pakistan dollar bonds traded higher yesterday.

The 2027-maturing bond was up 0.25 cents at 83.957 cents on the dollar while the 2025 bond was up 0.21 cents at 92.023 cents on the dollar.