As cash-strapped Pakistan secures a staff-level agreement (SLA) with the International Monetary Fund (IMF) to avoid a growing risk of default, Michael Kugelman, director of the South Asia Institute at the Wilson Center Said that this agreement will be shortened. Long-term stability for the country’s economy.
Kugleman told JEE News on Friday that a deal would avert a potential default, unlock additional funding from key creditors, and somewhat improve investor confidence in the country’s economy.
The comments came as Pakistan reached an SLA on a $3 billion “Standby Arrangement (SBA)” with the global lender.
In a statement, the IMF’s mission chief in Pakistan, Nathan Porter, said: “I am pleased to announce that the IMF team is working with the Pakistani authorities on a nine-month standby arrangement [SBA] at the staff level. agreement. A sum of SDR2,250 million [about $3 billion or 111[%] of Pakistan’s IMF quota.
Kugelman highlighted the underlying economic issues, saying the IMF deal would restore stability in the short term. “But the economy is still burdened by many structural weaknesses, so there will be a level of risk that will make a full recovery difficult,” he added.
Commenting on Finance Minister Ishaq Dar’s claims that geopolitics was the reason for the extraordinary delay in the IMF deal, Maher said: “A deal has put the lie to the idea that geopolitics is a factor in an agreement. was delaying.”
“Once Islamabad finally took monetary policy measures to meet the IMF’s conditions, negotiations began in haste and an agreement was reached,” he maintained.
Last week, in a last-ditch effort to secure a stalled rescue package with the IMF, the government introduced a number of changes to the fiscal year 2024 budget that raised policy rates to 22 percent in a bid to secure a deal. Also included is the extension.
Finance Minister Ishaq Dar announced on the floor of the National Assembly that for the fiscal year starting next month, the government will collect an additional 215 billion rupees in new taxes and cut spending by 85 billion rupees along with shrinking the budget. It will take several other measures. Financial loss
The IMF deal comes after an eight-month delay and offers some respite to Pakistan, which is grappling with a severe balance of payments crisis and dwindling foreign exchange reserves.
Funding of $3 billion over nine months is more than expected for Pakistan. The country was awaiting the release of the remaining $2.5 billion of the $6.5 billion bailout package scheduled for 2019, which expires on Friday (today).
