According to June 30 news reports, the International Monetary Fund (IMF) has reached a staff-level agreement (SLA) with Pakistan regarding a USD 3 billion Stand-By Arrangement (SBA).
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The agreement between the International Monetary Fund and Pakistan aims to stabilize Pakistan’s economy in the face of recent external disruptions, support efforts to achieve sustainable economic growth and provide a framework for financing from multilateral and bilateral partners. In response to the requirements of the Pakistani people, the IMF agreement with Pakistan will also make room for social and development spending through improved domestic revenue mobilization and prudent spending execution. The SLA is contingent on the approval of the IMF Executive Board, which is anticipated to review the request by mid-July.
The IMF staff, led by IMF Mission Chief to Pakistan Nathan Porter, met in person and virtually with Pakistani authorities to debate the terms of the new financing engagement under the IMF Stand-By Arrangement. The agreement between the International Monetary Fund (IMF) and Pakistan builds on the authorities’ prior efforts under Pakistan’s 2019 Extended Fund Facility (EFF)-supported program, which came to a close in June. Current economic challenges, including the impact of catastrophic floods in 2022, a rise in international commodity prices as a result of Russia’s conflict in Ukraine, and policy missteps, have resulted in stagnant economic growth, high inflation, and declining reserves.
IMF requests Pakistan to subsidize low-income earners and tax high-income earners.
Premier Shehbaz Sharif lauded the IMF agreement with Pakistan, expressing confidence that it would result in economic stability and sustainable development. To surmount the current challenges, the IMF emphasized the significance of consistent policy implementation, including fiscal discipline, a market-determined exchange rate, energy sector reforms, climate resilience, and an improved business climate.