(Reuters) – The International Monetary Fund (IMF) has reached a staff-level pact with Pakistan on a $3 billion stand-by arrangement, the lender said, a decision long awaited by the South Asian nation which is teetering on the brink of default.
The deal, subject to approval by the IMF board in July, comes after an eight-month delay and offers some respite to Pakistan, which is battling an acute balance of payments crisis and falling foreign exchange reserves.
Following are some reactions to the deal:
MOHAMMED SOHAIL, ANALYST WITH BROKERAGE FIRM TOPLINE SECURITIES, KARACHI
“This new programme is far better than our expectations. There were a lot of uncertainties on what will happen after June 2023 as there will be a new government coming to power. Now, this funding of 3 billion dollars and for 9 months will definitely help restore some investor confidence.”
AHFAZ MUSTAFA, CEO OF BROKERAGE FIRM ISMAIL IQBAL SECURITIES, KARACHI
“We have finally clinched an IMF deal. We didn’t complete the 9th review but have managed a SBA (staff-level agreement) which should clear any doubts of us defaulting in the near term. It also means that at this point no local/foreign restructuring of debt is on the cards. We have to wait for more details to come and see if any prior actions have to be fulfilled before the board meeting, but these are absolutely steps in the right direction for the economy.”
NATHAN PORTER, IMF OFFICIAL
“Despite the authorities’ efforts to reduce imports and the trade deficit, reserves have declined to very low levels. Liquidity conditions in the power sector also remain acute.”
“Given these challenges, the new arrangement would provide a policy anchor and a framework for financial support from multilateral and bilateral partners in the period ahead.
(Reporting by Pakistan bureau, compiled by Shilpa Jamkhandikar; Editing by Raju Gopalakrishnan)
