In a press conference today, Finance Minister Ishaq Dar confirmed that the central bank had received the first $1.2 billion installment from the IMF for the $3 billion Stand-by Arrangement (SBA) programme.
Pakistan has already received $1.2 billion, and the remaining $1.8 billion will be paid out following reviews in November and February. This would raise the country’s foreign exchange reserves, and by the end of the week on Friday, the SBP‘s reserves would have grown by $4.2 billion.
IMF grant will help economy
With the addition of the IMF’s tranche plus earlier transfers of $1 billion from the United Arab Emirates and $2 billion from the Kingdom of Saudi Arabia, the SBP’s foreign exchange reserves will rise over $8.5 billion. Next week’s central bank market update should reflect the new forex level.
A 9-month SBA for SDR2,250 million (about $3 billion, or 111 percent of quota) was authorised by the lender’s Executive Board on Wednesday to aid the Pakistani government’s economic stabilisation efforts.
The agreement comes at a difficult time for Pakistan’s economy. According to the IMF, FY23 was marked by significant fiscal and external deficits, rising inflation, and depleted reserve buffers due to the effects of a challenging external environment, disastrous floods, and policy mistakes.
It was also noted that the new SBA-backed programme in Pakistan will serve as a policy fulcrum for resolving the country’s internal and external imbalances and a blueprint for attracting funding from international and bilateral donors.
IMF Executive Board’s earlier declaration for the immediate credit of the first tranche in SBP has been confirmed by today’s disbursement of $1.2 billion. The remaining sum will be paid out in installments over the course of the program’s nine-month run, following two reviews spaced out every three months.
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