The State Bank of Pakistan (SBP) confirmed the receipt of the ultimate $1.1 billion tranche from the International Monetary Fund (IMF) in accordance with the stand-by agreement.
The Fund sanctioned the instant disbursement of roughly $1.1 billion to Pakistan on Monday. Its executive board convened in Washington and concluded the second examination under the SBA, resulting in total disbursements amounting to approximately $3 billion under the arrangement.
All members of the board favored the release of the final installment, except for India, which refrained.
“The finalization of the second and ultimate examination reflects the authorities’ fortified policy endeavors under the SBA, which have buttressed the stabilization of the economy and the resurgence of modest growth,” stated the IMF.
“To transition Pakistan from stabilization to a robust and sustainable recuperation, the authorities must persist in their policy and reform exertions, encompassing rigorous adherence to fiscal objectives,” the statement further explicated.
The IMF also cautioned Pakistan that in doing so, it must also shield the susceptible from the conceivable repercussions of such reforms. Additionally, the IMF underscored the necessity to comply with “a market-oriented exchange rate to assimilate external jolts; and broadening of structural reforms to bolster robust and more comprehensive growth.”
Presently, the SBP has issued a declaration affirming the receipt of the tranche from the Fund.
“SBP has received SDR (special drawing rights) 828 million (approximately U$1.1 billion) in value [on] April 29, 2024, in its account from IMF. The amount shall be manifested in SBP’s foreign exchange reserves for the week culminating on May 3, 2024,” stated the declaration.
SDRs are international reserve assets instituted by the IMF in 1969 and are apportioned to member states to supplement existing official reserves.
The IMF’s approval followed a meeting between PM Shehbaz and IMF Managing Director (MD) Kristalina Georgieva on the sidelines of the World Economic Forum’s (WEF) extraordinary gathering in Riyadh, wherein PM Shehbaz affirmed the government’s unwavering commitment to realigning Pakistan’s economy “on the right course.”
In a statement disseminated today, PM Shehbaz remarked that the release of the final tranche would foster greater economic equilibrium in Pakistan, as reported by state-run Radio Pakistan.
He articulated that the agreement with the IMF for the SBA had proven pivotal in “averting Pakistan from default during the sixteen months of his tenure in the previous government.”
“Hefty determinations made for the economic security of Pakistan are currently yielding favorable outcomes in the guise of economic stability,” he asserted, appending that the government was striving to enhance the economy and spur development in the nation.
The premier emphasized that obtaining a loan did not constitute success, contending that true success would ensue when Pakistan succeeded in liberating itself from debts.
He expressed optimism that the nation would break free from the cycle of debt and “usher into a prosperous epoch if we persist in the correct trajectory.” PM Shehbaz also conveyed gratitude to the Fund for assisting the country during challenging periods.
Last year, the IMF Executive Board greenlit the nine-month SBA pact with Pakistan “to underpin its economic stabilization agenda.” The authorization had enabled the immediate allocation of $1.2 billion, with the remainder dispersed over the duration of the program — subject to two quarterly appraisals.
Finance Minister Muhammad Aurangzeb has indicated that Pakistan is now contemplating a “more extensive and elongated” economic bailout arrangement with the IMF. The Fund has affirmed its readiness to facilitate in formulating a fresh economic scheme for Pakistan if the government seeks one.