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Monday, Jun 30, 2025

IMF reaches preliminary deal with Pakistan on $6B bailout

IMF reaches preliminary deal with Pakistan on $6B bailout

The International Monetary Fund said Thursday it has reached a preliminary agreement with Pakistan to revive a $6 billion bailout package for this impoverished, majority Muslim nation struck by a serious economic crisis since last year.
Pakistan and the IMF originally signed the accord in 2019. But the release of a slightly over $1 billion tranche had been on hold since earlier this year. That’s when the IMF expressed concern about Pakistan’s compliance with the conditions of the bailout under former Prime Minister Imran Khan. The parliament ousted Khan in a no-confidence vote in April.

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 Agreement with the Fund has set the stage to bring country out of economic difficulties,” Sharif wrote on Twitter.

In recent weeks, Pakistan’s government imposed additional taxes and slashed subsidies on fuel, electricity and natural gas to meet IMF’s conditions. That made the government highly unpopular, but Sharif says the actions were necessary.

In a statement Thursday, the fund said it has “reached a staff-level agreement (SLA) with the Pakistan authorities.” It added that the deal is “subject to approval by the IMF’s Executive Board.”

It said Pakistan will be eligible to receive a critical installment of about $1.17 billion.

According to the statement, the IMF will also raise the value of the bailout from $6 billion to $7 billion, subject to approval from the IMF’s executive board — usually considered a formality.

Finance Minister Miftah Ismail blamed Khan for creating a Sri Lanka-like situation in Pakistan and claimed the ousted premier had deliberately violated IMF’s conditions to remain popular.

In a video message, Sharif on Thursday announced he was slashing the prices of fuel and diesel by up to 15%, a move he said was made possible by the reduction in oil prices on the international market.

Analysts say the revival of the IMF’s bailout will help the government overcome the economic crisis because the release of installment of loans from the fund will encourage other international financial institutions to engage with Pakistan.

Authorities say Sharif’s government also approached Washington for help reviving the IMF bailout. Since his ouster, Khan has repeatedly alleged that his government was toppled under a U.S. plot, a charge Washington denies.
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