Pakistan has reached a staff-level agreement with the International Monetary Fund, a milestone that would pave the way for the release of an additional $1.2 billion in loans and unlock more funding. The IMF will also consider extending the facility to the end of June 2023, it said in a statement Wednesday, June 14. The accord will make additional funds available once approved by the board, increasing the extended loan facility with Pakistan to about $7 billion, it said. The IMF program “should alleviate fears of a near-term default scenario and unlock funding from other multilateral lenders,” Nicholas Yap, head of Asia credit desk analysts at Nomura Holdings Inc. in Hong Kong, wrote in a note. Pakistan’s rupee, dollar bonds and stocks rose as investors cheered the prospect of a bailout. The country requires at least $41 billion through June next year to keep the foreign-exchange stock at a “respectable” level and repay debts, the finance minister has said. The nation’s dollar bonds due in December was indicated 2.2 cents higher at 90.04 per dollar, while debt due in April 2031 was quoted 0.2 cents higher.

Source: Bloomberg