Huge increase in forex reserves as Pakistan receives a $1.1 billion IMF tranche

The State Bank of Pakistan (SBP) stated on Tuesday that it has received $1.1 billion from the International Monetary Fund (IMF), a day after the global lender approved Pakistan’s final tranche under the $3 billion Stand-By Arrangement (SBA). This news significantly increased Pakistan’s foreign exchange reserves.

The sum will be included in the SBP’s foreign exchange reserves for the week ending on May 3, 2024, according to an official announcement from the central bank.

The SBP said last week that repayments of external debt caused a $74 million decline in its foreign exchange reserves, which stood at $7.981 billion in the week ending on April 19.

The nation’s foreign reserves dropped to $13.281 billion, a decrease of $93 million. According to the SBP, commercial banks’ reserves dropped by $20 million to $5.299 billion.

The executive board concluded the second and final evaluation of Pakistan’s SBA-supported economic reform program, according to an official statement released by the IMF late on Monday.

Due to the board’s resolution, SDR 828 million, or roughly $1.1 billion, can be disbursed immediately, increasing the total amount disbursed under the agreement to SDR 2.250 billion, or roughly $3 billion.

In order to prevent a sovereign default, Pakistan obtained a $3 billion SBA with the IMF last summer. This was the third and last tranche of that agreement.

The 9-month SBA, adopted by the executive board on July 12, 2023, effectively established a framework for financial support from both bilateral and multilateral partners, according to the Washington-based lender, the International Monetary Fund (IMF).