Economic Crisis and Floods... Pakistan Finally Secures 1.6 Trillion Won IMF Bailout

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Pakistan, facing a crisis situation including floods that have claimed over 1,000 lives amid economic hardship, will receive International Monetary Fund (IMF) bailout funds worth approximately 1.6 trillion won.

According to Bloomberg and other sources on the 29th (local time), the IMF announced in a statement that it allocated 894 million IMF Special Drawing Rights (SDR) to Pakistan. This amounts to financial support worth 1.16 billion dollars (about 1.6 trillion won).

Bloomberg reported, "IMF support will be key to stabilizing Pakistan's economy, which has been hit by rising energy prices affecting foreign exchange reserves and inflation," adding, "The IMF's decision may lead to additional support from Pakistan's friendly countries."

The IMF stated, "Pakistan's economy is shaken by adverse external conditions, compounded by domestic issues including the Ukraine war and accommodative policies that caused unbalanced growth," and emphasized, "Steady execution of the 2023 fiscal year budget, acceptance of market-determined exchange rates, and pursuit of prudent monetary policy must be top priorities."

Pakistan agreed to receive a $6 billion bailout from the IMF in July 2019, but since then, some disbursements have been delayed due to Pakistan's failure to meet loan conditions.

In particular, this IMF support decision comes at a time when Pakistan is suffering severe damage from major floods amid economic difficulties. Since mid-June, the floods have caused 1,060 deaths so far, and 33 million people, equivalent to 15% of Pakistan's population, have been affected. The Pakistani government stated that the economic damage is estimated to exceed 10 billion dollars.

This content was produced with the assistance of AI translation services.