IMF board expected to approve funds 4-6 weeks post-SLA, say Finance Ministry sources
Metro Morning Report
ISLAMABAD: The International Monetary Fund (IMF) Executive Board is scheduled to meet in mid-August to discuss Pakistan’s proposed $7 billion bailout package. This development follows a staff-level agreement reached between Pakistan and the IMF on July 12. Sources within Pakistan’s Ministry of Finance indicate that the IMF board is expected to provide its final approval within four to six weeks of the staff-level accord.
However, before this approval can be finalized, Pakistan must secure external financing assurances from various sources. A notable aspect of the bailout discussions is Pakistan’s request for climate financing. The IMF’s Resilience and Sustainability Facility (RSF) program, which offers affordable and long-term financing, is expected to be a key element in these deliberations. The RSF aims to support countries in addressing climate change and enhancing their resilience against natural disasters.
To advance in this process, Pakistan is required to identify and prioritize long-term projects that address climate change and manage natural disaster risks. This step is crucial for aligning with the IMF’s conditions and ensuring that the climate financing component is effectively integrated into the bailout package. In preparation, Pakistan will need to engage with global institutions and stakeholders to meet the IMF’s requirements. The inclusion of climate financing in the bailout package reflects the IMF’s acknowledgment of the urgent need for financial support to tackle climate challenges and improve resilience against natural disasters.
The staff-level agreement, finalized on July 12, 2024, marks a critical step in securing the bailout package. This agreement outlines the economic reforms and fiscal adjustments required by Pakistan to meet the IMF’s conditions. The approval from the IMF Executive Board is the final hurdle before disbursement. Before the IMF’s final approval, Pakistan must secure external financing assurances from other international financial institutions, such as the World Bank, Asian Development Bank (ADB), and bilateral donors. These assurances are crucial for demonstrating that Pakistan can meet its financial obligations and sustain the economic reforms proposed in the agreement.
The upcoming IMF Executive Board meeting will be a critical moment for Pakistan as it seeks to finalize the $7 billion bailout package. The historical context of Pakistan’s engagement with the IMF, coupled with the financial and climate-related aspects of the current request, highlights the complex interplay between economic stabilization and environmental sustainability. As Pakistan navigates these challenges, securing the bailout package and implementing the associated reforms will be crucial for restoring economic stability and fostering long-term growth.
