Pakistan's adviser for finance, Abdul Hafeez Shaikh who effectively acts as the finance minister told reporters that the two sides had finalized the much-awaited and criticized package at the final round of months-long talks in capital Islamabad on Sunday.
Apart from the IMF package, Shaikh said the World Bank, and the Asian Development Bank (ADB) would provide an additional $2-3 billion to Islamabad.
Confirming the development, the IMF, in a statement, said it had reached an agreement with Islamabad, which would be presented before the Fund's executive board for formal approval.
“The IMF team have reached a staff-level agreement on economic policies that could be supported by a 39-month Extended Fund Arrangement (EFF) for about US$6 billion,” it said.
“Pakistan is facing a challenging economic environment, with lackluster growth, elevated inflation, high indebtedness, and a weak external position,” the statement said.
“The EFF aims to support the authorities’ ambitious macroeconomic and structural reform agenda during the next three years. This includes improving public finances and reducing public debt through tax policy and administrative reforms to strengthen revenue mobilization and ensure a more equal and transparent distribution of the tax burden,” IMF added.
Under the agreement, the government will no longer control the Dollar value against Rupee (local currency). Instead, it will be dealt by the open market.
Also, the government will start withdrawing exemptions offered in various taxes amounting to around Rs 350 billion in the budget for 2019-20, local English daily Pakistan Today reported.
The two sides also agreed that Pakistan would increase the costs of electricity and gas for the consumers in the next budget, the newspaper said.
Grappling with a colossal $18 billion current account deficit, Prime Minister Imran Khan's government had approached the IMF for a bailout package in August last year amid change of his financial team, which failed to contain the mounting current account and budget deficit and decreasing growth rate apart from a sharp devaluation of Rupee against Dollar in last 9 months.
The government has recently appointed an IMF employee as Governor of the State Bank of Pakistan- a move viewed as "outsourcing the economy to IMF" by the opposition.
Recently, Saudi Arabia and United Arab Emirates (UAE) have also announced $6 billion each bailout packages for Pakistan.
Islamabad’s current external debt stands at nearly $100 billion -- the bulk of it borrowed from the World Bank, IMF, Asian Development Bank, Islamic Development Bank, the United States, China, France and other countries.
The South Asian nuclear state has conceded a loss of $100 billion since 2002 after it joined the U.S.-led war against terrorism.