Pakistan: The International Monetary Fund (IMF) has announced a staff-level agreement with Pakistan for a $3 billion standby arrangement, providing much-needed relief to the country on the brink of default. The deal, awaiting approval by the IMF board next month, comes after an eight-month delay and offers respite to Pakistan, which is grappling with a severe balance of payments crisis and depleting foreign exchange reserves.

Pakistan Finance Minister Mr. Ishaq Dar Tweeted that the deal was expected to be finalized soon. Pakistan’s economy has been facing its worst crisis in decades, marked by high inflation and foreign exchange reserves barely covering a month’s worth of controlled imports. Without the IMF agreement, the country was at risk of defaulting on its debts.

Alhamdulillah, I am pleased to announce that Pakistan has reached a Staff-Level Agreement with the IMF on a nine-month US$3 billion Stand-By Arrangement. This Arrangement will help strengthen Pakistan’s foreign exchange reserves, enable Pakistan to achieve economic stability, and…

— Shehbaz Sharif (@CMShehbaz) June 30, 2023

The $3 billion funding, spanning nine months, exceeds initial expectations. Pakistan had been awaiting the release of the remaining $2.5 billion from a $6.5 billion bailout package agreed upon in 2019, which expired recently. The new standby arrangement builds upon the previous program, with a focus on addressing challenges faced by Pakistan’s economy, including last year’s devastating floods and commodity price hikes resulting from the conflict in Ukraine.

One key aspect of the discussions with the IMF has been the reform of Pakistan’s energy sector, which carries a significant debt of around 3.6 trillion Pakistani rupees ($12.58 billion). The agreement aims to address these challenges and support the country in stabilizing its economy.

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