Pakistan and the International Monetary Fund have agreed to a $5.3 billion bailout package yesterday. The executive board of the IMF would be considering an additional $2 billion request on 4 September.
Finance minister Ishaq Dar and the head of the visiting IMF staff mission, Jeffrey Franks, told a joint news briefing that Pakistan would need to take a number of prior steps, including reduction in fiscal deficit, implementation of an energy plan to put the sector on a stable footing, revival of the privatisation programme and making monetary policy adjustments.
Above all, these steps would need to be approved by the political leadership at the federal and provincial levels to qualify for presentation of the package to the IMF management and executive board for approval.
According to Dar, the two sides ''have reached an agreement for a 3-year programme of at least $5.3bn under an Extended Fund Facility''.
He added the IMF management had been requested by Pakistan through a conference call to hike the current level of access of 348 per cent of quota ($5.3 billion) to 500 per cent of quota ($7.3 billion) with appropriate front loading of disbursements to match Pakistan's repayment obligations under the previous IMF programme to ensure net outflows were not greater than fresh disbursements.
With the IMF staff based in Washington DC on an extended weekend from 4 July because of the independence day of US, Pakistan and the IMF would finalise the remaining work such as time schedule for signing the Letter of Intent (LoI), preparing staff report and presenting Pakistan's case before its executive board around 1 August, 2013 or a month later in September.
The time schedule assumes importance given that executive directors of IMF would be on leave for a month from 1 August, 2013 and in normal situation the executive board did not meet for approving routine loans except in case of an emergency.
The IMF's mission chief has in a recent de-briefing to all multilateral and bilateral donors based in Islamabad apprised them about the progress achieved thus far in the ongoing talks with Pakistan.