What Happened: The governor of the central bank of Pakistan, Reza Baqir, said Pakistan has satisfied all International Monetary Fund (IMF) preconditions for a $6 billion loan agreement announced May 12, The Express Tribune reported June 18. Baqir said Pakistan has allowed the rupee to be determined by market forces, raised interest rates, increased taxes on natural gas and electricity, and switched the government's borrowing from the central bank to commercial banks. The IMF will meet July 3 to finalize the deal, after which its key details will be made public.
Why it Matters: Securing the IMF loan in the short term will help Pakistan avoid a balance of payments crisis in which it would not be able to pay for its imports due to low foreign exchange reserves.
What to Watch: Details of the 39-month loan will prove instructive, as will statements by the country's former finance minister Asad Umar. Umar has vowed to publicly air his opinions on the monthslong loan negotiations, during which he was fired by Pakistani Prime Minister Imran Khan.
- Pakistan: The Political Cost of Islamabad's New IMF Loan (May 13, 2019)
- Pakistan Trudges Along a Familiar Economic Path (Sept. 21, 2018)