Moody’s Investors Service has said that the International Monetary Fund’s (IMF) staff level agreement with Pakistan will ease pressure on the country’s foreign exchange reserves, terming the development as a credit positive for the economy.
Last week, IMF staff and Pakistani authorities reached a staff-level agreement on policies to complete the combined seventh and eighth reviews of Extended Fund Facility (EFF). The IMF Board will consider an extension of the EFF until end-June 2023 and an augmentation of access by SDR 720 million that will bring the total access under the EFF to about $7 billion.
“The agreement is credit positive for Pakistan because it paves the way for the release of $1.2 billion in IMF financing at a time when its foreign exchange reserves are under significant pressure,” said Moody’s on Monday.
The credit ratings agency said that completion of the reviews is also likely to unlock additional funding from other multilateral and bilateral partners.
The agency expected Pakistan’s financing needs to remain high in fiscal year 2023 amid continued high global commodity prices and the need to repay external debt.
