energy subsidies and depleted the country’s foreign exchange reserves to a critically low level of $2.9 billion, the lowest in nine years.Under the new agreement, the IMF will disburse $3 billion over nine months. To clinch the deal, Pakistanby raising taxes by $750 million and hiking its interest rate to 22%, mainly to curb soaring inflation.
The deal replaces a four-year Extended Financing Facility program of $6.5 billion, originally signed by former Prime Minister Imran Khan in 2019, which expired last month. Last November, it was due for its ninth review by the global lender after previously clearing eight of the 11 reviews. But Khan’s government deviated from its IMF obligations days before he was ousted from the government in a parliamentary vote.
A Pakistani stockbroker monitors the latest share prices during a trading session at the Pakistan Stock Exchange in Karachi, Pakistan, on Feb. 10. The sluggish performance of the market was attributed to the delay in concluding the ninth review of a $7 billion US dollar IMF loan program.The new IMF funds will likely bring short-term relief by unlocking credit from other financiers, including the private market, and strengthening prospects for foreign direct investment.