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Economy

Flood-hit Pakistan faces swirling risks despite IMF lifeline

$1.1bn loan eases fears of default but climate and politics pummel Sharif government

Nowshera, in Pakistan's province of Khyber Pakhtunkhwa, on Aug. 29: The climate minister has said that a third of the country has been flooded.   © Reuters

ISLAMABAD -- Cash-strapped and flood-stricken Pakistan has grabbed a crucial lifeline from the International Monetary Fund as it rushes to avoid a debt default and resuscitate its economy. But while the approval of a loan worth "about $1.1 billion" offers relief, experts and the IMF itself acknowledge the South Asian country is hardly in the clear.

The multilateral lender's board met on Monday, U.S. time, and agreed to resume Pakistan's extended fund facility (EFF) program, which was established in July 2019 but paused because Islamabad failed to stick to targets amid the COVID-19 pandemic and sinking economy.

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