Pakistan says IMF approves $1.17 billion bailout to avert near-term default
Pakistan said it secured a $1.17 billion bailout from the International Monetary Fund to avert an imminent default as political turmoil and deadly flooding threaten the South Asian economy.
Finance Minister Miftah Ismail announced the IMF board’s approval of the funds in a post on his Twitter account on Monday.
The funds will be key to stabilizing Pakistan’s economy after surging energy costs eroded the nation’s foreign-exchange reserves and stoked Asia’s second-fastest inflation. The nation needs $31 billion in total financing through June 2023, while it is projected to have secured $38 billion. The IMF decision will also pave the way for more aid from friendly nations.
Pakistan has had a tumultuous track record with the IMF. The government secured a bailout program in 2019 only to have it stall several times due to Islamabad’s failure to meet some loan conditions. Prime Minister Shehbaz Sharif’s government, since taking office in April, has reversed energy subsidies, imposed fresh taxes and unveiled austerity measures to avert what would be the second default in Asia this year after Sri Lanka.
The bailout also comes as Islamabad faces fresh challenges due to precarious political settings and renewed climate crisis. Former premier Imran Khan is waging a fierce campaign against the government to press for fresh elections, while catastrophic floods cost the economy billions of dollars.
Pakistan’s dollar bonds, currency and stocks have pared some losses this month on expectation of the nation resuming its IMF program. Pakistan’s dollar bonds are the top performer in Asia in August, while the rupee has gained about 7 percent in August so far. The nation’s stocks, meanwhile, have rallied 8 percent, the top performer in Asia after Sri Lanka.