SBP confirms receiving $1.1bn IMF tranche
The State Bank of Pakistan (SBP) on Tuesday said it had received the final $1.1 billion tranche from the International Monetary Fund under the stand-by arrangement.
On Monday, the Fund had approved the immediate disbursement of approximately $1.1bn to Pakistan. Its executive board met in Washington and completed the second review under the SBA, bringing total disbursements under the arrangement to about $3 billion.
All board members favoured releasing the last installment except India, which abstained.
“The completion of the second and final review reflects the authorities’ stronger policy efforts under the SBA, which have supported the stabilisation of the economy and the return of modest growth,” the IMF said in a statement.
“To move Pakistan from stabilisation to a strong and sustainable recovery the authorities need to continue their policy and reform efforts, including strict adherence to fiscal targets,” the statement added.
The Fund also reminded Pakistan that while doing so, it also needed to protect the vulnerable from the possible impact of such reforms. The IMF also emphasised the need to adhere to “a market-determined exchange rate to absorb external shocks; and broadening of structural reforms to support stronger and more inclusive growth.
Today, the SBP issued a statement saying it had received the tranche from the Fund.
“SBP has received SDR (special drawing rights) 828 million (around U$1.1bn) in value [on] April 29, 2024, in its account from IMF. The amount shall be reflected in SBP’s foreign exchange reserves for the week ending on May 3, 2024,” the statement said.
SDRs are international reserve assets created by the IMF in 1969 and are allocated to member states to supplement existing official reserves.
The approval by the IMF came a day after PM Shehbaz met IMF Managing Director (MD) Kristalina Georgieva on the sidelines of the World Economic Forum’s (WEF) special meeting in Riyadh and assured her that the government was fully committed to putting Pakistan’s economy “back on track”.
In a statement released today, PM Shehbaz said the release of the final tranche would bring more economic stability to Pakistan, state-run Radio Pakistan reported.
He was quoted as saying that the agreement with the IMF for the SBA had proven to be crucial in “preventing Pakistan from default during the sixteen months of his tenure in the previous government”.
“Tough decisions taken for economic security of Pakistan are yielding positive results now in the form of economic stability,” he said, adding that the government was doing its best to improve the economy and bring development to the country.
The premier asserted that taking a loan was not a success, adding that it would be a success when Pakistan managed to break free from loans.
He expressed the hope that the country would rid itself of the debt cycle and “enter a prosperous era if we continue to work in the right direction”. PM Shehbaz also thanked the Fund for supporting the country during difficult times.
Last year, the IMF Executive Board had approved the nine-month SBA arrangement with Pakistan “to support its economic stabilisation programme”. The approval had allowed for an immediate disbursement of $1.2bn, with the rest phased over the programme’s duration — subject to two quarterly reviews.
Finance Minister Muhammad Aurangzeb has said that Pakistan is now eyeing a “longer and larger” economic bailout package with the IMF. The Fund has said it will support formulating a new economic programme for Pakistan if the government seeks one.