IMF Approves $3B Bailout for Pakistan

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Facts

  • On Wednesday, the International Monetary Fund (IMF) approved a $3B bailout for Pakistan in a move that unlocks vital funding that could prevent the nation from defaulting on its debt.1
  • According to the IMF, the nine-month standby deal for Pakistan is “to support the authorities’ economic stabilization program.”2
  • Pakistan's PM Shehbaz Sharif echoed this sentiment, saying it would help the nation "overcome immediate to medium-term economic challenges." As well as struggling with debt repayments, the foreign currency reserves used to pay for imports have been draining rapidly.3
  • The approval will reportedly see $1.2B disbursed immediately, with the remainder to be paid out "over the program's duration," subject to quarterly reviews.4
  • The IMF loan comes after Saudi Arabia and the UAE deposited $2B and $1B into the State Bank of Pakistan — a decision that boosted Pakistan's foreign exchange reserves, which rose to $7.5B, more than double its account balance last week.2
  • In light of the news, Pakistan's rupee reportedly climbed 2.38 against the US dollar on Thursday.5

Sources: 1Al Jazeera, 2Independent, 3Yahoo News, 4The Times of India, and 5MSN.

Narratives

  • Pro-establishment narrative, as provided by DAWN. Though Pakistan wasted nine months trying to find an alternative to a previously agreed bailout deal, this new stand-by agreement has given the country a second chance to complete a job that should have already been done. This is just the first step to resolving the crisis, but it's vital to prevent a tragic default in the run-up to national elections by unlocking inflows from bilateral and multilateral partners.
  • Establishment-critical narrative, as provided by The Express Tribune. There's plenty of evidence that the Western liberal capitalist order is crumbling, but the Pakistani political elite has decided to bow to the IMF's diktats of austerity as if there was no way out of this crisis other than a bailout that undermines the nation's sovereignty. No matter how painful it could be, Islamabad should have followed the Chinese example to revamp its economy on a truly sustainable path.