KARACHI: Pakistan has received inflows of $1.1 billion from International Monetary Fund (IMF) as final loan tranche of Board’s Stand-By Arrangement (SBA) programme.
The IMF’s executive board, in its meeting held on April 29, completed the second and final review of Pakistan’s economic reform program supported by the IMF’s SBA and allowed for an immediate disbursement of SDR 828 million (around $1.1 billion) for Pakistan under the programme.
Accordingly, SBP has received $ 1.1 billion equal to SDR 828 million on April 29, 2024 in its account from the IMF. These inflows will be reflected in SBP’s foreign exchange reserves for the week ending on 3rd May 2024.
IMF Executive Board approves final review of SBA, allows disbursement of $1.1bn for Pakistan
However, it is estimated that with the arrival of these inflows, the reserves held by the SBP would surge to the $9 billion mark, if no major external debt servicing occurred. During the week ended on Apr 19, 2024, SBP’s reserves stood at about $8 billion level despite repayment of $1 billion of Eurobond in the first week of April.
In July 2023, the IMF approved a 9-month SBA program for Pakistan for an amount of SDR 2,250 million or about $3 billion to support Pakistan’s economic stabilisation program.
The arrangement was approved at a challenging economic environment, when the country was facing challenges like large fiscal, high external deficits, rising inflation and lower foreign exchange reserves.
This is the third and last disbursement under the SBA. First tranche of $1.2 billion was arrived on July 13, 2023. Second tranche of some $700 million was received in January this year following the successful completion of the first review and the third and last tranche of SBA amounted to $1.1 billion released on April 29, 2024, bringing total disbursements under the arrangement to about $3 billion (SDR 2.250 billion).
On completion of the SBA program, Pakistan is negotiating with funds for a long-term loan programme to achieve macroeconomic stability in the country.
While approving the final tranche of SBA, IMF has said that macroeconomic conditions of Pakistan have improved over the course of the program and 2 percent GDP growth is expected in FY24 given. It may be mentioned here that the IMF in its statement issued after the Executive Board meeting on April 29, 2024, has also appreciated the State Bank of Pakistan’s efforts and said that SBP’s tight monetary policy stance remains appropriate until inflation returns to more moderate levels.
Further improvements in the functioning of the foreign exchange (FX) market, together with a marketdetermined exchange rate, will help buffer external shocks and attract financing, thereby supporting competitiveness and growth.
Copyright Business Recorder, 2024