IMF transfers $1.2 billion to Pakistan

ISLAMABAD: The International Monetary Fund (IMF) on Thursday transferred $1.2 billion of the total $3 billion to the State Bank of Pakistan’s (SBP) account under the Stand-By Agreement (SBA) that was approved by the IMF board the previous day.

Talking to media persons, Federal Minister for Finance and Revenue Senator Ishaq Dar said that the balance amount of $1.8 billion would be provided after two reviews that would be held in November 2023 and February 2024.

The finance minister said that the IMF funds would help improve foreign exchange reserves, adding that in total around $4.2 billion were added to the country’s reserves during the week, the official news agency reported.

These include $2 billion from Saudi Arabia, $1 billion from United Arab Emirates and $1.2 billion from the IMF.

The state bank would issue the exact figures on Friday, he said, adding that the reserves are expected to reach between $13 billion and $14 billion.

The minister thanked Prime Minister Shehbaz Sharif and his economic team for their untiring efforts made during the past eight months in materialising the programme.

The minister said that the agreement was limited to nine months to enable the new elected government to take decisions for future.

He said Pakistan was going forward in a positive direction and highlighted that there was need to consolidate the gains and take the economy to a growth trajectory.

It is pertinent to mentioned here that the IMF Executive Board had approved the Stand-by Agreement (SBA) of US$3 billion for Pakistan.

The staff level agreement on the SBA amounting SDR2,250 million (about $3 billion or 111 percent of Pakistan’s IMF quota) was reached during the last week of June after an IMF staff team led by Nathan Porter held in person and virtual meetings with the Pakistani authorities to discuss a new financing engagement for Pakistan under the arrangement.

The new SBA builds on the authorities’ efforts under Pakistan’s 2019 Extended Fund Facility supported programme, which was to expire in June.

According to a statement issued by the IMF, 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 statement said.

Pakistan’s new SBA-supported programme will provide a policy anchor for addressing domestic and external imbalances and a framework for financial support from multilateral and bilateral partners.