ISLAMABAD (Reuters) – Pakistan has reached an “agreement in principle” with the International Monetary Fund (IMF) on a bailout and expects to formally secure a bailout as early as this month, a Pakistani minister said on Monday. “After months of discussions and negotiations, a staff-level agreement has been reached between Pakistan and the IMF,” he said in a speech to the state-ran PTV News. “Pakistan is facing a challenging economic environment, with sluggish growth, increased inflation, high debt and a weak external position,” the IMF said in a statement that outlined the framework agreement. Muhammad Azhar, Minister of State for Revenue, tweeted that during Umar`s trip, “an agreement in principle was reached with the IMF on all outstanding issues.” Pakistan has reached an agreement with the International Monetary Fund on a three-year, $6 billion bailout aimed at strengthening fiscal fragility and strengthening a slowing economy, officials said Sunday. The human resources agreement allowed for formal approval by the Executive Board of the International Monetary Fund (IMF) in Washington, said Dawn News, the Prime Minister`s advisor for finance, finance and the economy, Dr. Abdul Hafeez Shaikh. Earlier this month, Finance Minister Asad Umar travelled to Washington to meet with the IMF, which on Monday described the talks as “constructive discussions.” The International Monetary Fund said on Thursday it had reached a staff-level agreement with Pakistan on “policies and reforms” to finalize the second revision of the $6 billion bailout (about 41,314 kronor), Dawn reported. Financial assistance is an attempt to help the country save its slowing economy, improve its public finances and reduce its debt. “Pakistan is facing a challenging economic environment, with sluggish growth, higher inflation, high debt and a weak external position,” Rigo said in his statement.
[…] The authorities recognize the need to address these challenges and address the high informality of the economy, low spending on human capital and poverty. In this regard, the government has already begun a difficult but necessary adjustment to stabilize the economy, including extensive support from the State Bank of Pakistan. These efforts need to be stepped up. “The next step will be to send its mission to Pakistan in the coming weeks to develop technical details. But in principle, we reached an agreement,” he said. Umar, however, was removed from his position in a dramatic step and replaced by Dr. Shaikh, an internationally renowned economist. The agreement is now awaiting the approval of the International Monetary Fund`s Executive Board, expected in April. Once the review of the agreement is complete, the organization will contribute approximately $450 million. The Pakistani authorities did not give the exact details of the policy and reforms needed to carry out the second revision of the agreement, Dawn reported.
However, both sides agreed to create “some air to breathe” before making a further adjustment to rising inflation in Pakistan.