The International Monetary Fund (IMF) said on Monday it had agreed with Pakistan on measures needed to revive a stalled $6bn funding programme for the South Asian country, which faces growing economic challenges.
“The Pakistani authorities and IMF staff have reached a staff-level agreement on policies and reforms needed to complete the sixth review,” the IMF said in a statement.
Pakistan had been in talks with the IMF for several months to seek a relaxation in the terms and conditions of the package. Its government bonds jumped between 1.3 and 2.8 cents on the United States dollar on the news of an agreement, and were on course for their best day in over a year.
“The agreement is subject to approval by the Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms,” the IMF said.
The completion of the review, pending since earlier this year, would make available 750 million in IMF special drawing rights, or around $1bn, bringing total disbursements so far to about $3bn, the statement said.
Pakistan will ensure legislation is passed on central bank autonomy as agreed with the IMF, said Finance Adviser Shaukat Tarin, who is equivalent to the country’s finance minister.
“God willing, we will get it passed,” he said. “We believe that the state bank … should be independent in monetary policy and exchange rate.”
Pakistan’s government has a simple majority in parliament to pass the law.