—– Global lender confirms $1.2 bln immediate disbursement, the rest to follow
—– Says program to facilitate Pakistan’s fiscal adjustment and ensure debt sustainability
—– Notes the scheme iis subjected to two quarterly reviews
Staff Report
ISLAMABAD: The International Monetary Fund’s (IMF) executive board approved a $3 billion bailout programme for Pakistan on Wednesday, the lender said, which will immediately disburse about $1.2 billion to help the country.
On June 29, the IMF and Pakistan reached a Standby Arrangement to ease the country’s financial crisis.
“The Executive Board of the International Monetary Fund approved a 9-month Stand-By Arrangement (SBA) for Pakistan for an amount of SDR2,250 million (about $3 billion, or 111 per cent of quota) to support the authorities economic stabilisation programme,” the global lender said in a statement.
It said the arrangement comes at a challenging economic juncture for Pakistan. “A difficult external environment, devastating floods and policy missteps have led to large fiscal and external deficits, rising inflation and eroded reserve buffers in FY23,” the IMF added.
The IMF board approval was needed before disbursing the first tranche of money, with the rest to arrive later in instalments.
IMF’s approval comes after Saudi Arabia and the United Arab Emirates (UAE) deposited $2 billion and $1 billion, respectively, in the State Bank of Pakistan, boosting the foreign exchange reserves.
The $3bn funding, spread over nine months, is higher than expected for Pakistan. The country was awaiting the release of the remaining $2.5bn from a $6.5bn bailout package agreed in 2019, which expired in June.
Commenting on the development, Prime Minister Shehbaz Sharif said the approval of the $3bn agreement was a “major step forward” in the government’s efforts to stabilise the economy and achieve macroeconomic stability.
“It bolsters Pakistan’s economic position to overcome immediate- to medium-term economic challenges, giving the next government the fiscal space to chart the way forward,” he stated.
The premier said the “milestone”, which he claimed was achieved “against the heaviest of odds” and against a “seemingly impossible deadline”, could not have been possible without “excellent team effort”.
“I would commend Finance Minister Ishaq Dar and his team at the Ministry of Finance for their hard work,” PM Shehbaz said. He also thanked the IMF managing director and her team for their support and cooperation.
