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IMF approves payment of stalled loan tranche to Pakistan

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The International Monetary Fund (IMF) has agreed to pay Pakistan a $500m tranche of a bailout package that was suspended a year ago due to Islamabad’s failure to implement reforms.

Pakistan secured a $6bn bailout package in 2019 to avert a balance of payment crisis, but the loan was suspended after the payment of only two tranches.

The IMF, however, cited a lack of progress on a package of economic reforms attached to the loan, which included raising energy prices and boosting revenue collection, considered one of the lowest in the world.

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The international financial institution announced it would pay the latest tranche after the success of negotiations between the two sides late Tuesday night.

“This is a good development for Pakistan,” Finance Minister Hafeez Shaikh said in a statement.

The IMF had asked Pakistan to give up central bank control of the currency and to adopt a market-based exchange rate, privatize loss-making public sector companies and end subsidies in power and agriculture sectors.

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Some of the reforms were implemented since the deal was signed, but privatization and ending subsidies remained elusive due to political pressure.

The economy of the Muslim nation with a population of 220 million has slid deeper into crisis since Prime Minister Imran Khan took over in 2018.

Burgeoning fiscal, current account deficits and a dip in revenues from tax collection are at the heart of the crisis.

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