IMF Approves Resuming $6 Billion Bailout Package for Pakistan

(Bloomberg) -- The International Monetary Fund agreed to resume a $6 billion loan to Pakistan, marking progress in a program that's been moving in fits and starts since 2019.

The executive board of the Washington-based lender completed its sixth review of the extended fund facility, allowing the nation to receive about $1 billion, the fund said in a statement on Wednesday. The IMF also finished its annual Article IV evaluation of the nation's economy.

Continued commitment to a market-determined exchange rate and a prudent mix of economic policies will help reduce Pakistan's current-account deficit and ease external pressures in the medium term, the IMF said. Yet Pakistan remains vulnerable to potential worsening of the pandemic, tighter international financial conditions, an increase in geopolitical tensions and delayed implementation of reforms, the fund said.

The bailout program announced in May 2019 has been stalled at least three times amid the pandemic and Islamabad's tardy progress in meeting some loan conditions. Prime Minister Imran Khan's administration has since boosted tax revenue by almost 350 billion rupees ($2 billion), raised utility tariffs and pledged greater autonomy to the central bank.

“The authorities' recent policy efforts to strengthen economic resilience are welcomed,” Antoinette Sayeh, the IMF's deputy managing director, said in a statement. “Timely and consistent implementation of policies and reforms remain essential to lay the ground for stronger and more sustainable growth.”

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Finance Minister Shaukat Tarin, who took office in April last year, had renegotiated some of the loan terms, including lenient tax targets.

Pakistan is a serial borrower and has gotten 13 loans from the multilateral lender since the late 1980s to fend off chronic balance of payments problems. Saudi Arabia provided $4.2 billion in assistance to Pakistan in October, and the nation separately raised $1 billion in a sukuk program last week.