ISLAMABAD: In a significant development for Pakistan’s economic stability, the International Monetary Fund’s (IMF) Executive Board has given the green light for a $700 million loan tranche for the country. The loan will strengthen the nation’s foreign exchange reserves, providing a much-needed financial support.
The Ministry of Finance said in a post on X that the loan was released after the IMF board completed its first review of Pakistan’s economic reform program supported by a standby arrangement (SBA).
The Executive Board of the International Monetary Fund (IMF) completed the 1st review and allows for an immediate disbursement of SDR 528 million (around US$ 700 million) bringing the total disbursements under the SBA to US$ 1.9 billion.
— Ministry of Finance, Government of Pakistan (@Financegovpk) January 11, 2024
Under the $3 billion SBA, Pakistan had previously received $1.2 billion from the IMF as the initial tranche, with the remaining two tranches contingent upon reviews. The completion of the first review now facilitates an immediate disbursement of approximately $700 million, bringing the total disbursements under the SBA to $1.9 billion.
Significance of IMF Loan Program for Pakistan
Financial expert Dr. Khaqan Hasan Najeeb emphasized the significance of clearing the first review, noting that it is crucial for Pakistan to adhere to the IMF program given its external financing needs of $25 billion. He added that the arrival of $700 million from the IMF, along with multilateral flows, would not only bolster the reserves of the State Bank of Pakistan (SBP) but also instill confidence in the markets.
Pakistan faced the looming threat of default as the Pakistan Democratic Movement (PDM) was concluding its term last year. However, entering into the SBA with the IMF played a pivotal role in averting a sovereign default.
