Pakistan may be able to obtain a timely relief of its vast external debt thanks to a new $3 billion credit readiness agreement, the IMF said in Washington.
Pakistan’s economy, the world’s fifth most populous nation, is experiencing a balance-of-payments crisis as it tries to service its vast external debt, after months of political chaos alienated any potential foreign investment.
Inflation rose significantly and the rupee’s exchange rate collapsed and the country could no longer repay its imports, causing a sharp decline in industrial production.
“I am pleased to announce that the IMF team has reached a staff-level agreement with the Pakistani authorities on a nine-month credit readiness agreement of 2,250 million SDRs,” roughly $3 billion, IMF official Nathan Porter said in a statement. This amount represents 111% of Pakistan’s IMF share.
The IMF Executive Board will have to approve the agreement by mid-July, according to Porter.
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