Islamabad: International credit rating agency ‘Moody’s’ on Tuesday (July 19) termed the staff-level agreement between Pakistan and the International Monetary Fund (IMF) as ‘Credit Positive’, news sources reported. Pakistan is due to get USD 1.7 billion of the total USD 7 billion under the Extended Fund Facility (EFF).
The agency further clarified that the agreement will increase the chances of Pakistan gaining access to the 7th and 8th trenches, totalling USD 1.7 billion, which is expected to be extended till June 2023. As the country’s foreign exchange reserves are under great strain, the loan is critical for Pakistan to stay afloat and prevent a credit crisis. Moody’s further stated that the IMF’s disbursement of 720 million Special Drawing Rights (SDR) will pave the way for loans from other financial institutions such as the World Bank (WB), Asian Development Bank (ADB), and friendly countries.
It should be noted that Pakistan inked a financial credit deal with the IMF in 2018 to grant a USD 6 billion credit in several trenches. However, as international conditions have changed, the country’s foreign reserves have decreased further. To lower the current account deficit (CAD), the government has also banned the import of luxury items. However, the gap hit its peak in June.