Pakistan reaches agreement with IMF to resume loan programme

A $1.2bn disbursement is expected in August after the fund's management gives final approval

A vendor receives a payment from a customer at a local market in Karachi, Pakistan. Inflation in the South Asian country has accelerated to a 13-year high. Photo: Bloomberg

Pakistan has reached a staff-level agreement with the International Monetary Fund to resume its loan programme, according to a government official familiar with the matter.

A $1.2 billion disbursement is expected in August after the IMF’s management gives final approval, the source said, asking not to be identified before a formal announcement.

Representatives for the IMF in Pakistan and the nation’s finance ministry did not reply to emails seeking comment.

The disbursal would offer relief to the South Asian nation, whose foreign-exchange reserves can cover less than two months of imports. Inflation has accelerated to a 13-year-high.

Pakistan has raised electricity tariffs and almost doubled diesel pump prices over the past two months to meet the IMF's conditions.

The Washington-based lender has also agreed to increase the loan programme size by $1bn — taking it to a total $7bn — and extend it through June 2023, the source said.