(Bloomberg) -- Pakistan secured final approval to start a $7 billion loan program from the International Monetary Fund, unlocking crucial financing to sustain the nation’s recovery from a crisis.
The IMF executive board on Wednesday gave the final approval for the 37-month program, the prime minister’s office and IMF said in separate statements. The move allows for an immediate disbursement of about $1.1 billion, Pakistan State Bank governor Jameel Ahmad told reporters earlier on the day.
“The new program will require sound policies and reforms to support the authorities’ ongoing efforts to strengthen macroeconomic stability, address deep structural challenges, and create conditions for a stronger, more inclusive, and resilient growth,” the Washington-based fund said in its statement.
Pakistan has been relying on IMF aid to keep up with its debt obligations after suffering a dollar shortage that brought the South Asian nation to the brink of an economic collapse. The nation faces about $26 billion in loan repayments in the fiscal year started July.
The nation’s dollar bonds are among the top performers in emerging markets this year, handing investors a return of 38%. Notes due 2031 rose 0.4 cents to 85.1 cents to the dollar on Thursday.
Rating Upgrades
The program starts after a delay, as Pakistan had earlier expected to secure IMF board approval in August after a preliminary deal in July. The nation had raised its tax revenue goal by a record 40% and increased energy prices to meet demands set by the IMF.
Pakistan secured an upgrade from Moody’s Ratings in late August and Fitch Ratings in July. The IMF program brings certainty over Pakistan’s sources of financing to meet its needs over the next two to three years, Moody’s said.
--With assistance from Maria Elena Vizcaino and Ezra Fieser.
(Updates with a chart and bonds in fifth paragraph. An earlier version of this story was corrected to say Fitch upgraded the nation in July)
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