Pakistan Reaches Staff-Level Agreement with IMF for $1.3 Billion Package
Pakistan and IMF reaches Staff Level Agreement for US 1.3 billion package. For Pakistan, this is one of the biggest news items: Pakistan convinced the IMF for the first review of their IMF program and climate-resilient agreement to tackle natural disasters, which is a new 28-month program. Now it is safe to say that Pakistan is on track towards economic stability. Moreover, Pakistan wants to get rid of balance of payment issues, which is one of the reasons Pakistan goes back to the IMF after a couple of years to avoid external default.
The IMF program has created a positive investment environment for Pakistan, as the PSX (Pakistan Stock Exchange) is bullish today due to the IMF announcing the staff-level agreement, and once the IMF executive board approves the staff-level agreement, then the amount will be disbursed to Pakistan within 2 or 3 days.
Pakistan is facing external loan issues because of its extremely high external debt, which is getting harder for Pakistan to manage. However, late but correct, now Pakistan has made a decision that they will only import products and services that they can self-fund, and they will not allow traditional current account deficit issues to rise again, which is one of the major causes of Pakistan's external debt increase.
Moreover, the Ministry of Finance says that Pakistan is committed to the IMF program; reforms regarding tax and major economic reforms are the top priority. Moreover, due to forex exchange reforms, the Pakistani rupee is much more stable, and it has increased remittances to record levels. The rise of remittances has helped Pakistan avoid costly external loans and manage to avoid a current account deficit as well.
The State Bank of Pakistan has played a major role in arranging the staff-level agreement with the IMF for its first review of the 2024 program. Moreover, the State Bank of Pakistan managed to purchase a massive amount of dollars from the exchange market, which made the PKR more stable.
