The finance ministry announced that the International Monetary Fund (IMF) has completed its first review of Pakistan’s economic reform program under a $3 billion Stand-By Arrangement (SBA). As a result, the IMF has allowed the immediate disbursement of $700 million, bringing the total disbursements under the SBA to $1.9 billion.
Mohammad Sohail, CEO of Topline Securities, commented that the IMF funding, along with recent inflows from multilateral lenders, will aid in stabilizing the Pakistani rupee. This new tranche of funding is expected to help Pakistan secure rollovers from allied countries such as the United Arab Emirates, China, and Saudi Arabia, and ease external debt repayment pressure.
The IMF Executive Board approved a nine-month arrangement with Pakistan in June 2023, allowing for an immediate disbursement of $1.2 billion. The current IMF program is expected to conclude in the second week of April, with the initial tranche of $1.2 billion released in July.
A Staff-Level Agreement was reached between the IMF staff and Pakistani authorities in November 2023 regarding the first review under Pakistan’s SBA. This agreement was contingent upon approval by the IMF’s Executive Board, and Pakistan is likely to receive the remaining funds in March under the $3 billion SBA.
Despite the tough conditions, caretaker Finance Minister Shamshad Akhtar has informed the nation that the country needs to enter a new agreement with the IMF for support of the economy, as Pakistan is still facing very high inflation.
The latest data reveals that Pakistan has engaged in 24 arrangements with the IMF since becoming a member in 1950, highlighting the country’s historical reliance on IMF support to address economic challenges.