© Reuters. FILE PHOTO: A trader shows U.S. dollar notes at a currency exchange booth in Karachi, Pakistan December 3, 2018. REUTERS/Akhtar Soomro//File Photo
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By Asif Shahzad
ISLAMABAD (Reuters) – Pakistan’s Prime Minister Shehbaz Sharif said he was optimistic that the International Monetary Fund will approve a $3 billion bailout at its board meeting on Wednesday.
Pakistan and the Fund reached a staff level agreement last month, securing much-needed funding for the cash-starved country.
The agreement needs the board’s approval before disbursing $1.1 billion upfront and the rest of the money in instalments.
“The meeting is happening today,” Sharif said at an event in Islamabad. “I hope the board will approve the programme. This programme will help Pakistan’s economy to stabilise.”
The nine-month short-term lifeline for Pakistan’s ailing economy, which has been on the cusp of default, came after eight months of tough negotiations over fiscal discipline.
The $350 billion South Asian economy faced a crippling balance of payments crisis, with its central bank’s reserves barely enough to cover a month of controlled imports.
The IMF board approval will also unlock other bilateral and multilateral external financing for Pakistan.
Beijing rolled over $5 billion of Pakistan’s loan in the last three months, which Sharif said he believed played a major role in averting the debt default.
Saudi Arabia deposited $2 billion in support funds with the central bank on Tuesday. Fitch credit rating agency on Monday upgraded Pakistan’s sovereign rating to CCC from CCC-, and the bailout has brought relief to investors in the country’s stocks and bonds.
