International Monetary Fund (IMF) said on Wednesday, November 15, that a team led by Nathan Porter has reached a staff-level agreement (SLA) with the Pakistani authorities. The team visited Islamabad to hold discussions on the first review of Pakistan’s economic program supported by an IMF Stand-By Arrangement (SBA).
“The IMF team has reached a staff-level agreement (SLA) with the Pakistani authorities on the first review of their stabilization program supported by the IMF’s US$3 billion (SDR2,250 million) SBA. The agreement is subject to approval of the IMF’s Executive Board. Upon approval around US$700 million (SDR 528 million) will become available bringing total disbursements under the program to almost US$1.9 billion," it said in a press release.
Earlier, IMF Managing Director Kristalina Georgieva said she expects a deal on a debt review with Pakistan to come soon, a development that could unlock more funds for the South Asian nation.
“I expect an agreement of the review to come within this week,” Georgieva told Bloomberg Television’s Haslinda Amin in an interview in Singapore on Wednesday. The Pakistani authorities, especially the finance minister “deserve credit for a very difficult time sticking to the program that they have,” she said.
An IMF team is currently in Pakistan for a scheduled review of its loan agreement signed in July, ahead of the release of an instalment of about $700 million. Reaching a deal on the review would improve Pakistan’s access to other credit.
In a wide-ranging interview, Georgieva painted a bleak picture of economic hardship across the world, spurred by higher interest rates, a failure to fully recover from the pandemic and conflicts in Europe and the Middle East. She warned that if the Israel-Hamas war persists, it could have “dramatic consequences.”
Georgieva said the economies of Gaza, the West Bank and Israel have been devastated. She pointed out that 8% of Israel’s labour force is now in the army while tourism in neighbouring countries such as Lebanon, Egypt and Jordan has drastically dropped.
“The world is on edge,” she said. “If there is an impact on oil prices, what we did in fighting inflation is going to be partially lost and that can be a big problem.”
The fund last month lifted its global inflation forecast for next year to almost 6% and called for central banks to keep policy tight until there’s a durable easing in price pressures.
“At this point, we are not projecting recession. However, we are in a world of exceptional uncertainty,” Georgieva added. “Anything we can do to bring this uncertainty down is going to be healthy for the world economy.”
Georgieva said she isn’t worried about a global debt crisis but reiterated that low- and middle-income countries were vulnerable to rising borrowing costs.
(Edited by : Sangam Singh)
First Published: Nov 15, 2023 4:11 PM IST
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