ISLAMABAD: The Executive Board of the International Monetary Fund (IMF) on Monday approved the final tranche of $1.1 billion for Pakistan under the 9-month, $3 billion Standby Arrangement (SBA).
The IMF had not listed Pakistan in the April 29th calendar issued on its website. The Executive Board approved the completion of the second review of the $3 billion Standby Arrangement, confirmed the Ministry of Finance sources.
The funding is the last tranche of a $3 billion SBA with the IMF.
The country has so far received $1.9 billion under the SBA. The latest approval paved the way for the release of the last loan tranche of $1.1 billion which would bring the total disbursements to 3 billion dollars.
This development came shortly after Prime Minister Shehbaz Sharif, at the closing session of the World Economic Forum in Riyadh, described Pakistan’s debt situation as a severe challenge for his administration.
It is the second bailout package that the country completed in past eight years. Last time, it had successfully implemented the $6 billion Extended Fund Facility from 2013-2016. But it again had to seek another bailout package in 2019, which remained unsuccessful.
Till filling of this report, the Fund had not issued any statement regarding the Board approval.
The Fund issued the state which stated; Executive Board of the International Monetary Fund (IMF) completed the second and final review of Pakistan’s economic reform program supported by the IMF’s Stand-By Arrangement (SBA). The Board’s decision allows for an immediate disbursement of SDR 828 million (around $1.1 billion), bringing total disbursements under the arrangement to SDR 2.250 billion (about $3 billion).
Macroeconomic conditions have improved over the course of the program. Growth of 2 percent is expected in FY24 given continued recovery in the second half of the fiscal year.
The fiscal position continues to strengthen with a primary surplus of 1.8 percent of GDP achieved in the first half of fiscal year 2024, well ahead of projections and putting Pakistan on track to achieve its end-FY24 target primary surplus of 0.4 percent of GDP. Inflation, while still elevated, continues to decline, and, with appropriately tight, data-driven monetary policy maintained, is expected to reach around 20 percent by end-June.
Assuming ongoing sound policies and reform efforts, inflation should return to the SBP’s target with growth continuing to strengthen over the medium term.
Gross reserves have increased to around $8 billion, up from $4.5 billion at the start of the program, and are projected to continue being rebuilt over the medium term.
Copyright Business Recorder, 2024
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