Pakistan’s US $ 6 Billion EFF Arrangement with IMF

Over the past year i.e. 2018–2019, Pakistan has been facing challenging macro-economic conditions that include a ballooning fiscal imbalance and a weak external position with gross reserves at $8 billion, equal to 1.7 months of imports. On June 19, 2019, Reza Baqir, the Governor of the State Bank of Pakistan wrote to the Managing Director of the IMF, seeking assistance under the Extended Fund Facility (EFF), on grounds that Pakistan’s international reserves had touched critically low levels with a large balance of payments gap, in an environment of limited market access. The situation was grim and extremely worrisome. Macro-economic vulnerabilities increased on the back of weak policies, with pro-cyclical fiscal policies leading to a surge in fiscal deficit and an accommodative monetary policy resulting in a significant current account deficit.