Pakistan gets final IMF nod for $3-bn loan in stand-by arrangement

Subject : International Relations

Section: International Organisation

Concept :

After months-long negotiations, the International Monetary Fund (IMF) approved the $3 billion Standby Arrangement for Pakistan.
The IMF said that the programme would focus on the “implementation of the FY24 budget to facilitate Pakistan’s needed fiscal adjustment and ensure debt sustainability“, Dawn reported.
The approval allows for an immediate disbursement of $1.2 billion, the report said.

IMF and its Bailout

The IMF is an international organization that provides loans, technical assistance, and policy advice to member countries.
Established in 1944 to promote international monetary cooperation, exchange rate stability, balanced economic growth, and poverty reduction.
Headquarters located in Washington, D.C., and it has 190 member countries.
An IMF bailout, also known as an IMF program, is a loan package provided to financially troubled countries.
Bailout programs have specific terms and conditions that borrowing countries must meet to access the funds.

Types of Bailouts

Stand-by Arrangements

Description: Short-term lending programs for countries with temporary balance of payments problems.
Duration: 1-2 years
Conditionality: Specific macroeconomic policies for stabilization

Extended Fund Facility

Description: Medium-term lending programs to address balance of payments difficulties from structural weaknesses
Duration: Longer Term
Conditionality: Extensive conditionality and significant reforms

Rapid Financing Instrument

Description: Loan program providing quick financing for countries with urgent balance of payments needs.
Duration: Flexible
Conditionality: Fewer conditions and shorter application process