Past Failures Haunt Pakistan’s IMF Deal

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The IMF is expected to meet next week to finalize the final review of Pakistan’s $3 billion Stand-By Arrangement (SBA) and to approve the release of the final tranche of $1.1 billion for Pakistan.

Last month, the IMF and Pakistani authorities an agreement on the second and final review that was forwarded to the IMF board for final approval after which Pakistan would be able access $1.1bn.

It is critical that this happens as it will also lay the grounds for Pakistan’s ability to start conversations on the next, 24th bailout loan.

According to Finance Minister Muhammad Aurangzeb Pakistan was on track to secure the next 24th IMF bailout loan from the IMF, noting that the IMF was “very receptive in terms of agreeing to consider a larger, longer programme.” The Finance Minister indicated that Pakistan was seeking a $6 billion bailout loan from the IMF though he did clarify that the figure was a “guesstimate.”

Pakistan has a long history of failing to abide by its commitments to the IMF and that has over time created a history of mistrust. Pakistan will need to demonstrate that it will abide by its commitments in the coming years in order to ensure that it receives the 24th loan and that the loan is of a significant amount.

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Author: Adam Ahmad