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IMF's $1.1B Deal with Pakistan Hits a Snag, Talks Continue

Pakistan and the International Monetary Fund (IMF ) are to discuss how to keep the country afloat during its economic crisis.

The talks aim to unlock at least $1.1 billion of stalled funding as part of a $6.5 billion bailout signed in 2019. Finance Minister Ishaq Dar announced that virtual talks would resume on Monday and that "routine procedures" were the reason for the delay. In a statement, Pakistan IMF Mission Chief Nathan Porter confirmed that talks were continuing, and that significant progress had already been made.

The $350-billion economy of Pakistan is in dire need of a successful outcome, as it still struggles to recover from devastating floods last year and has limited foreign reserves to cover less than three weeks of crucial imports. The longer the IMF tranche is delayed, the higher the risk of default, especially with elections also approaching. The IMF has set conditions for the release of funds, including a return to a market-based exchange rate and higher fuel prices. Pakistan has also agreed with the IMF to introduce fiscal measures, including new taxes. However, some analysts fear that more fiscal tightening could further destabilize the economy.

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