IMF to disburse $1.1 billion to Pakistan

IMF to disburse $1.1 billion to Pakistan mind map
Recent News:
Final tranche of $3 billion rescue-package
Date: March 20, 2024
When:
Board review in April
Deal expires April 11
Why:
Avoid sovereign debt default
Balance of payment crisis
What
Staff-level agreement
Fiscal consolidation benchmarks review
Conditions met:
Budget revision
Interest rate hike
Increase in taxes, electricity, gas prices
Proposed reforms:
Broadening tax base
Adjusting power and gas tariffs
Privatisation of PIA
Setting up holding company for PIA's debt
Where:
Pakistan
IMF Headquarters: Washington, D.C.
Who:
IMF
International Monetary Fund
Pakistan
Nathan Porter
IMF team leader
Muhammad Aurangzeb
Finance Minister of Pakistan
Shehbaz Sharif
Prime Minister of Pakistan
Imran Khan
Former Prime Minister
How:
Staff-level agreement reached
Approval by IMF's Executive Board required
Fiscal benchmarks set for loan reviewed
Significance:
Economic stability
Avoidance of sovereign default
Expected modest growth
Inflows from partners
Challenges:
High inflation above target
Economic vulnerabilities
Need for more policy reforms
Way Forward:
Seeking new long-term bailout
Medium-term programme discussions
Deeper structural conditionality focus

The IMF has initially agreed to disburse $1.1 billion to Pakistan, marking the final portion of a previously secured $3 billion rescue package. This financial aid is crucial for Pakistan as it navigates through a dire economic situation, including a balance of payment crisis and the looming threat of sovereign debt default. The staff-level agreement, subject to approval by the IMF’s Executive Board, aims to bolster Pakistan’s economy by implementing stringent fiscal measures, including a budget revision, an interest rate hike, and the increase in taxes and utility prices. Additionally, it calls for broadening the tax base and adjusting power and gas tariffs. Amidst seeking this disbursement, Pakistan is already in pursuit of another long-term bailout from the IMF, indicating ongoing economic challenges and the need for substantial policy reforms​.

In simpler terms, the International Monetary Fund (IMF) has decided to give Pakistan $1.1 billion as the last part of a bigger $3 billion help package. This money is very important for Pakistan to help fix its economic problems and to avoid failing to pay back its debts. The deal between the IMF and Pakistan requires Pakistan to make some tough economic changes, like increasing taxes and the cost of electricity and gas, to get the money. Also, Pakistan is looking for more help from the IMF to keep improving its economy. This is a step to help Pakistan’s economy get better, but it also shows that Pakistan has to make more changes to fully stabilize its economy.

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