Pakistan gets draft approval for $1.1 bln IMF payout

ISLAMABAD

Pakistan reached a tentative deal to unlock a $1.1 billion tranche of an International Monetary Fund (IMF) bailout deal, the global lender said on March 20, giving much-needed respite to the South Asian nation.

Last summer, cash-strapped Pakistan sketched a $3 billion deal with the IMF as it battled a balance-of-payments crisis which brought it to the brink of default.

After six days of talks in Islamabad, concluding Tuesday, the IMF said officials had reached a "staff-level agreement" to pay out the latest portion of the deal, subject to board approval in late April.

Pakistan held elections last month, and a shaky coalition government has been tasked with an economic turnaround requiring them to agree to a raft of unpopular IMF belt-tightening measures.

In a statement, the IMF said "Pakistan's economic and financial position has improved" in recent months.

"However, growth is expected to be modest this year and inflation remains well above target, and ongoing policy and reform efforts are required to address Pakistan's deep-seated economic vulnerabilities."

Pakistan has historically been hamstrung by chronically low tax takings and unsustainable subsidies which have seen it accrue huge foreign debts it struggles to pay down without outside assistance.

The new administration, led by Prime Minister Shehbaz Sharif, is also set to barter over a fresh deal after the conclusion of the current nine-month program.