IMF board to meet on July 12 to review Pakistan's loan agreement

The IMF's executive board is set to meet on July 12 to review the $3 billion Standby Arrangement with cash-strapped Pakistan and will also possibly release the first tranche of $1.1 billion as part of the loan programme, a media report said on Wednesday.

The Pakistan government and the International Monetary Fund (IMF) reached a long-awaited staff-level agreement on June 29 to inject $3 billion into the ailing economy after months-long negotiations that pushed the country to the brink of default.

The nine-month Stand-by Arrangement (SBA), if approved, will bring $3 billion, or 111 per cent of Pakistan’s IMF quota which will ease the country’s financial crisis, the Dawn newspaper reported from Washington.

Read | Why Pakistan badly needed IMF deal?

The initial disbursement is contingent upon the board's approval as the country continues to grapple with a severe balance of payments crisis and declining foreign exchange reserves.

Pakistan was absent from an earlier schedule released in June, igniting speculation that the Washington-based lender was not going to release funds from an earlier programme that expired on June 30.

Pakistan was expecting about $2.5 billion from the Washington-based global lender but it was given $3 billion.

Pakistan had earlier cleared eight of the 11 listed programme reviews, with the ninth review pending since November last year, the report said.

Meanwhile, Pakistan has submitted a letter of intent to the IMF, assuring the lender that no new tax amnesty will be introduced in the next nine months.

The letter, signed by Finance Minister Ishaq Dar and the State Bank governor, guarantees the removal of trade barriers and upholding commitments to other financial institutions and bilateral donors that have provided loans to the country, the report added.

Read | Pakistan set to become 4th biggest IMF debtor: Report

Amidst the political turmoil, Pakistan's economy has been in a free fall mode for the last many years, bringing untold pressure on the poor masses in the form of unchecked inflation, making it almost impossible for a vast number of people to make ends meet.

It has faced several challenges in recent times, including devastating floods last year and commodity price hikes following the war in Ukraine.

Over 1,500 people were killed last year during floods in Pakistan that destroyed millions of homes, wiped out swathes of farmland, and caused billions of dollars in economic losses.