IMF agrees with Pakistan to revive $6bn bailout package

Under newly elected Prime Minister Shahbaz Sharif, the government has been in talks with the IMF since May to avoid a default like Sri Lanka’s.

“The deal with the fund has set the stage for taking the country out of economic troubles,” Sharif wrote on Twitter.

In recent weeks, the Pakistani government has levied additional taxes and cut subsidies on fuel, electricity and natural gas to meet IMF requirements. This made the government very unpopular, but Sharif says the measures were necessary.

In a statement Thursday, the fund said it had “entered into an employee-level agreement (SLA) with the Pakistani authorities.” It added that the deal was “subject to approval by the IMF’s Executive Board.”

It said Pakistan was eligible to receive a critical rate of about $1.17 billion.

According to the statement, the IMF will also increase the value of the bailout package from $6 billion to $7 billion, subject to approval by the IMF’s Executive Board, which is usually considered a formality.

Finance Minister Miftah Ismail accused Khan of creating a Sri Lankan situation in Pakistan. Ismail said Khan intentionally flouted the IMF’s terms to remain popular.

Analysts say the revival of the IMF’s bailout package will help the government weather the economic crisis, as the release of loan installments from the fund will encourage other international financial institutions to look into Pakistan.

Authorities say Sharif’s government has also turned to Washington for help in reviving the IMF’s bailout package. Since his ouster, Khan has repeatedly claimed his government was overthrown as part of a US conspiracy, a charge Washington denies.