The funds are the final tranche of the latest $3 billion bailout package that Pakistan secured last summer to prevent it from defaulting on its debt. Islamabad is also seeking another long-term bailout.
“The IMF staff has reached a staff-level agreement with the Pakistani authorities on the second and final review of Pakistan’s stabilisation programme,” the IMF said in a statement.
“This agreement is subject to approval by the IMF’s Executive Board,” it added. The agreement expires on 11 April.
The agreement came after five days of talks by an IMF delegation with Pakistani officials to review the fiscal consolidation criteria for the loan.
Most Pakistani dollar bonds traded higher on Wednesday after the deal was announced.
The 2027 bond was up 0.25 cents at 83.957 cents per dollar, while the 2025 bond was up 0.21 cents at 92.023 cents per dollar.
Pakistan’s finance minister Muhammad Aurangzeb had said Islamabad would seek a new long-term bailout. The IMF said Pakistan had shown interest in a deal and would set up a medium-term programme if Islamabad applied.
The government has not officially disclosed the size of the additional funding it is seeking through the successor programme, but Bloomberg reported in February that Pakistan was planning to seek a new loan of at least $6 billion from the lender.
The debt-ridden economy, which contracted by 0.2% last year and is expected to grow by around 2% this year, is under extreme stress with low reserves, a balance of payments crisis, inflation of 23%, policy rates of 22% and a record depreciation of the local currency.
Prior to the stand-by arrangement, Pakistan had to meet IMF conditions such as revising its budget, raising interest rates, raising revenues through higher taxes and increasing inflationary electricity and gas prices.
