IMF grants Pakistan a $700 million loan tranche
The International Monetary Fund (IMF) has disbursed $700 million as part of the previously agreed upon bailout program, which is a big development for Pakistan’s suffering economy, as revealed on Wednesday by State Bank of Pakistan (SBP) Governor Jameel Ahmed.
Following the IMF Executive Board’s initial assessment last week, the loan was approved, bringing the $3 billion Standby Arrangement (SBA) total disbursements to about $1.9 billion.
Antoinette Sayeh, the Deputy Managing Director and Chair, stated last week that there were “now tentative signs of activity picking-up and external pressures easing” following the board’s consent.
Aiming to offer a framework for financial support from both bilateral and multilateral partners, as well as a policy foundation for resolving internal and foreign balances, the nine-month SBA was approved by the Executive Board on July 12 of last month.
Pakistan adopted strict IMF-recommended measures, a redesigned budget, a record interest rate increase, and excruciating hikes in gas and electricity prices, in order to obtain the bailout.
In order to meet fiscal adjustments, the IMF also forced Pakistan to levy an additional $1.34 billion in taxes as part of the bailout agreement. The actions contributed to May’s record-breaking 38% year-over-year inflation, which is still above 30%.
“The government implemented drastic measures in 2023 to bring the price of natural gas and electricity closer to cost. Improving the sector’s profitability and preserving fiscal sustainability depend on pressing cost-side power sector changes and carrying out regularly scheduled adjustments, according to Sayeh.
Analysts anticipate that Pakistan, a struggling country in South Asia, will be able to acquire further bilateral and multilateral loans now that it has secured the IMF loan.
The United Arab Emirates (UAE) has rolled over two $1 billion deposits that were about to mature, giving the friendly nation some reprieve, the State Bank of Pakistan (SBP) said in a statement.
UAE has confirmed rollover of its two deposits of US$1.0 billion each placed with State Bank of Pakistan for another one year which were maturing in January 2024.#SBP
— SBP (@StateBank_Pak) January 17, 2024
The statement stated, “UAE has confirmed rollover of its two US$1.0 billion deposits, each, placed with State Bank of Pakistan for another one year, which were maturing in January 2024.”
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