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In a significant development, the International Monetary Fund (IMF) has granted Pakistan a $3 billion bailout to save the country from defaulting on its debt repayments. This financial assistance comes as a lifeline for Pakistan, which has been struggling with severe economic challenges.
The approval of the bailout was announced by the IMF's executive board on Wednesday, following a series of meetings between Pakistani officials and the IMF. The funds will be disbursed over a nine-month period to support Pakistan's economic stabilization program.
The decision is a relief for Pakistan, which has faced a difficult economic situation. Various circumstances including a difficult external climate, destructive floods, and policy errors have resulted in significant fiscal and external imbalances, escalating inflation, and diminished reserve buffers during the fiscal period.
Prime Minister Shehbaz Sharif welcomed the decision, expressing his gratitude and stating that it is a major step forward in the government's efforts to stabilize the economy and achieve macroeconomic stability.
The bailout had been on hold since December when the IMF withheld a critical $1.1 billion part of the loan due to Pakistan's lack of compliance with a 2019 agreement. The country needs at least $20 billion in the next two years to meet foreign loan repayments with interest. Earlier this year, foreign exchange reserves fell to less than $4 billion, covering only four weeks of imports. To address the situation, Pakistan imposed restrictions on certain imports to conserve dollars.
The authorization of the IMF loan follows closely after Saudi Arabia's deposit of $2 billion into Pakistan's central bank, alongside the United Arab Emirates' deposit of $1 billion. These contributions, coupled with the IMF bailout, will provide support to Pakistan's economy.
With the IMF's approval, Pakistan has secured the financial support it urgently needed, providing a ray of hope for the nation's economic recovery and growth.
- Bandana Gaur
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