Pakistan, IMF reach staff-level agreement on 1st review of loan program, new $1.3B climate fund

The Pakistani federal government has reached a deal with the International Monetary Fund (IMF) for a new $1.3 billion arrangement and also agreed on the first review of the ongoing 37-month bailout program, the Fund said, Report informs via Dawn.

Pending board approval, the government can unlock the $1.3bn under a new climate resilience loan program spanning 28 months.

It will also free $1bn for the country under the $7bn bailout program, which would bring those disbursements to $2bn.

“The IMF team has reached a staff-level agreement (SLA) with the Pakistani authorities on the first review of the 37-month extended arrangement under the Extended Fund Facility (EFF), and on a new 28-month arrangement under the IMF’s [Resilience and Sustainability Trust] with total access over the 28 months of around $1.3 billion,” Nathan Porter, mission chief to Pakistan, said in a statement by the Fund.

Pakistan had requested $1bn from the IMF’s RSF in October. The funding under RSF is made available to nations that commit to high-quality reforms to build resilience against climate catastrophes through adaptation. It is repayable over 30 years, including a 10-year grace, and is normally cheaper than terms for an EFF, such as the $7bn loan program which is underway.

The government says the $350bn economy has stabilized under the $7bn IMF bailout that had helped it stave off a default threat.

The government had been awaiting the IMF agreement on the first review of the bailout and disbursement of $1bn ahead of the annual budget, usually presented in June.