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Pakistan, IMF Reach Deal On $6 Billion Bailout Package

Pakistan's adviser on finance, Abdul Hafeez Shaikh, said the deal shows that effective reforms are under way in the South Asian country. (file photo)

Pakistan and the International Monetary Fund (IMF) have reached a staff-level agreement on a new three-year, $6 billion bailout package following months of negotiations.

The accord, which must still be approved by the IMF board of directors in Washington, is intended to shore up Pakistan's public finances and strengthen its slowing economy.

The long-delayed package would be Pakistan's 13th bailout since the late 1980s.

In a statement on May 12, the IMF said that its team reached a deal "on economic policies that could be supported by a 39-month Extended Fund Arrangement (EFF) for about $6 billion."

It said the package will include "an ambitious structural reform agenda" to boost growth, which the lender expects to slow to 2.9 percent this year from 5.2 percent in 2018.

Speaking on television, Pakistan's adviser on finance, Abdul Hafeez Shaikh, said that the deal showed that effective reforms were under way in the South Asian country.

The program aims to "support the authorities' strategy for stronger and more balanced growth by reducing domestic and external imbalances, improving the business environment, strengthening institutions, increasing transparency, and protecting social spending," said Ramirez Rigo, who headed the IMF delegation to Islamabad.

Rigo said that Pakistan "is facing a challenging economic environment, with lackluster growth, elevated inflation, high indebtedness, and a weak external position."

Inflation in Pakistan was over 9.4 percent in March, its highest since November 2013, with strong price increases in food and energy, the two most sensitive items for most consumers.

Prime Minister Imran Khan, who took office in August 2018, has promised to improve the economy and provide more jobs.

With reporting by Reuters and AFP
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