Islamabad: In a significant economic development, Pakistan has successfully received a crucial loan tranche of $700 million from the International Monetary Fund (IMF) as part of the nine-month Stand-By Arrangement (SBA).
This positive news follows closely on the heels of the Executive Board of the IMF concluding the first review of Pakistan’s economic reform program, a key component supported by the Stand-By Arrangement. The Board’s decision has resulted in an immediate disbursement of approximately $700 million, bringing the total disbursements under the arrangement to an impressive $1.9 billion.
The nine-month SBA for Pakistan, approved by the Executive Board on July 12, 2023, initially amounted to $3 billion. The program aims to serve as a policy anchor, addressing both domestic and external balances, while establishing a framework for financial support from various multilateral and bilateral partners.
The program’s key focuses include the implementation of the FY24 budget to facilitate necessary fiscal adjustments and ensure debt sustainability, protecting essential social spending. Additionally, it emphasizes a return to a market-determined exchange rate, proper functioning of the foreign exchange market to absorb external shocks, and the elimination of foreign exchange shortages. Tight monetary policies, aiming at disinflation, and further progress on structural reforms, especially in the energy sector viability, State-Owned Enterprise (SOE) governance, and climate resilience, are integral components of the program.
According to an official statement issued on January 11, 2024, Deputy Managing Director and Chair Antoinette Sayeh expressed that Pakistan’s performance under the Stand-By Arrangement has contributed significantly to stabilizing the economy after the substantial shocks experienced in FY2022-23. Noting tentative signs of economic activity picking up and external pressures easing, Sayeh emphasized the critical importance of continued strong ownership to ensure the momentum endures, ultimately solidifying the stabilization of Pakistan’s economy.
This latest financial injection is expected to play a crucial role in supporting Pakistan’s economic recovery and fostering stability as the nation progresses through the implementation of its economic reform program.