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Pakistan, IMF agree on reforms to release around $500 million

Pakistan, IMF agree on reforms to release around $500 million

The amount will be released after the approval from IMF’s executive board

The International Monetary Fund (IMF) and Pakistan reached a staff-level agreement over reforms necessary for the release of around $500 million in funds, the IMF and the country’s finance ministry said. The IMF executive board has yet to give final approval to the release of the $500 million tranche.

“Pending approval of the Executive Board, the reviews’ completion would release around US$500 million,” the IMF said.

According to a statement, IMF said that Pakistan’s progress under the Extended Fund Facility (EFF) had been temporarily disrupted due to COVID-19. It further stated that the performance before the pandemic was on target.  

“The Pakistani authorities remain committed to ambitious policy actions and structural reforms to strengthen economic resilience, advance sustainable growth, and achieve the EFF’s medium-term objectives,” the statement noted. “The policies and reforms implemented by the Pakistani authorities prior to the COVID-19 shock had started to reduce economic imbalances and set the conditions for improving economic performance. Most of the targets under the EFF-supported program were on track to be met.”

Finance Minister Dr. Abdul Hafeez Shaikh said that a number of challenges caused by coronavirus had to be overcome through focused efforts and the release of the latest tranche is good news.

Minister for Industries and Production Hammad Azhar also echoed similar sentiments, suggesting that the country has “successfully gone through a stabilization phase, fared better than most countries during the Covid-19 shock, and is now entering the growth period”.

Pakistan has been under an IMG program worth $6 billion since 2019. However, there have been issues and only a few tranches have been released by IMF. There are structural reforms being undertaken in order to meet their requirements. However, some of these can extremely stringent and leads to financial issues for the masses, such as price hikes of the utilities.  

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