The International Monetary Fund said Pakistan is taking “decisive steps” to push through a series of economic reforms, a sign that an agreement may be near to revive a bailout program set to expire this month.
(Bloomberg) — The International Monetary Fund said Pakistan is taking “decisive steps” to push through a series of economic reforms, a sign that an agreement may be near to revive a bailout program set to expire this month.
The country’s authorities are bringing policies “more in line with the economic reform program supported by the International Monetary Fund,” the crisis lender’s Pakistan mission chief, Nathan Porter, said in a statement. “The IMF team continues discussions with Pakistani authorities with the aim of quickly reaching an agreement on financial support.”
The statement is the strongest signal yet that Pakistan may be close to regaining access to a $6.7 billion bailout program that’s been stalled for more than six months. The program is set to expire at the end of this week.
Steps taken in Islamabad include parliament’s approval of a budget that expands the tax base and allows for more social and development spending, and efforts to improve the functioning of the foreign exchange market, Porter said.
Porter also cited the country’s tightening of monetary policy to reduce inflationary and balance of payment pressures that “affect particularly the more vulnerable.”
Read more: Pakistan Hikes Rate to Record in Emergency Meet as IMF Looms
The South Asian nation is going through a severe economic crisis amid record inflation and interest rates. Pakistan’s dollar bonds were the top performers in emerging markets as of early Tuesday, with notes due in 2031 rising more than 1.8 cents on the dollar to 39.3 cents, according to indicative pricing data by Bloomberg.
The revised budget appears to fall short of fully addressing the IMF’s concerns. but the removal of import restrictions is an important step, JPMorgan Chase & Co. said in a research report. It said Pakistan may not get all the money it wants from the IMF and still may need another loan after elections later this year.
–With assistance from Maria Elena Vizcaino.
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