IMF reaches staff deal with Pakistan, potentially unlocking US$1.2 billion

BENGALURU: The International Monetary Fund has reached a staff-level agreement with Pakistan on reviews of some of its lending programmes, potentially unlocking about US$1.21 billion in financing pending board approval, the fund said on Wednesday.

If the board approves the deal, Pakistan could access about US$1 billion under the Extended Fund Facility and US$210 million under the climate-focused Resilience and Sustainability Facility, bringing total disbursements under the two programmes to around US$5.7 billion.

Pakistan remains reliant on external financing to bolster foreign exchange reserves and meet debt repayments.

"Supported by the EFF, the authorities have successfully navigated the impact of the Middle East conflict, and strong policies have helped preserve macroeconomic stability," the fund said.

Risks remain elevated, however, due to geopolitical tensions, volatile energy prices, tighter global financial conditions and trade disruptions, the IMF said.

Pakistan is the most vulnerable major Asia-Pacific economy to a prolonged Middle East conflict, given its dependence on Gulf energy imports, remittances and financing support from the region, Ahmad Mobeen, principal economist at S&P Global Market Intelligence, said earlier this year.