Islamabad: Pakistan has inked an agreement with the IMF for a bailout package. As per the agreement, the neighbouring country will receive $6 billion over three years. This amount will help the country with foreign debt obligations, said reports. (Also read: US to Oppose IMF Bailout to Pakistan to Repay China Debt)

The agreement now awaits formal approval by the International Monetary Fund (IMF) board, said Dawn. It quoted Pakistan Prime Minister’s adviser on Finance, Revenue and Economic Affairs Dr Abdul Hafeez Shaikh as confirming the same.

The deal comes after months of negotiations over what is touted to be Pakistan’s 22nd such bailout. Shaikh told state TV that foreign loans have exceeded $90 billion, and exports have registered a negative growth over the past five years.

“So Pakistan will get $6 billion from the IMF, and in addition, we will get $2 to $3 billion from the World Bank and Asian Development Bank in the next three years,” said Shaikh during the broadcast.

“The trade deficit reached $20 billion and our foreign exchange reserves have dipped by 50 percent in the past two years. So we have a $12 billion gap in our annual payments and we don’t have the capacity to pay them,” he added.

The IMF said that its team reached an agreement on policies that could be supported by a 39-month Extended Fund Arrangement for about $6 billion.

In a statement, IMF delegation head Ramirez Rigo said, “The program aims to support the authorities’ strategy for stronger and more balanced growth by reducing domestic and external imbalances, improving the business environment, strengthening institutions, increasing transparency, and protecting social spending.”

The United States has also warned that it will be watching closely to ensure Pakistan does not use IMF money to repay debts to China which has invested billions in infrastructure projects under its Belt and Road Initiative.

Pakistan has had 21 bailouts since it joined the IMF in 1950. Its most recent loan was issued in 2013, worth $6.6 billion.

The United Arab Emirates, Pakistan’s largest trading partner in the Middle East and a major investment source, has anyway offered Pakistan $3 billion to support the battered economy.

Islamabad also secured $6 billion in funding from Saudi Arabia and struck a 12-month deal for a cash lifeline during Prime Minister Imran Khan’s visit to the kingdom in October.