IMF and Pakistan reach $3 billion stand-by deal

Pakistan could get temporary relief for its ballooning foreign debt with a new stand-by arrangement worth $3 billion announced by the IMF in Washington on Thursday.

The economy has been stricken by a balance-of-payments crisis as it attempts to service crippling external debt, while months of political chaos have scared off potential foreign investment.

Inflation has rocketed, the rupee has plummeted and the country can no longer afford imports, causing a severe decline in industrial output.

"I am pleased to announce that the IMF team has reached a staff-level agreement with the Pakistani authorities on a nine-month standby arrangement in the amount of SDR2,250 million (about $3 billion)," said IMF official Nathan Porter in a statement.

The figure represents 111 percent of Pakistan's International Monetary Fund quota.

The deal will need to be approved by the IMF's executive board by mid-July, Porter said.

Pakistan's negotiations with the IMF for the last tranche of a $6.5 billion bailout package agreed in 2019 have stalled since November, with the government making last-minute changes to the national budget to try to meet the deal's requirements.

That package expires on Friday, and the new agreement builds on the IMF's efforts under the previous deal, Porter said.

AFP