imf approves $1.1 billion funding for pakistan
Published on: May 5, 2024.
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IMF Approves $1.1 Billion Loan for Pakistan as Final Installment of $3 Billion Arrangement
The International Monetary Fund (IMF) has given its approval for a $1.1 billion loan to Pakistan, marking the final installment of a $3 billion Stand-by Arrangement (SBA). This decision comes after the Executive Board of the IMF completed the second and final review of Pakistan’s economic reform program supported by the SBA.
Under the arrangement, Pakistan is set to receive a total of SDR 2.250 billion (approximately $3 billion) in disbursements. The immediate disbursement of SDR 828 million (approximately $1.1 billion) will provide much-needed financial support to the country.
Antoinette Sayeh, Deputy Managing Director and Chair of the IMF, highlighted the progress Pakistan has made in restoring economic stability under the 2023 Stand-By Arrangement. She emphasized the importance of capitalizing on this stability by continuing to implement sound macroeconomic policies and structural reforms that will contribute to stronger, inclusive, and sustainable growth. Sayeh also stressed the need for ongoing external support.
The IMF emphasized the appropriateness of the State Bank of Pakistan’s tight monetary policy stance in managing inflation until it reaches more moderate levels. It also emphasized the importance of improving the functioning of the foreign exchange market and implementing a market-determined exchange rate to enhance resilience against external shocks and attract financing for growth. Additionally, the IMF called for sustained efforts to rebuild foreign exchange reserves and address undercapitalized financial institutions to ensure financial stability.
The loan is expected to be disbursed this week and represents a crucial step in preventing a sovereign default for Pakistan. The discussions during the IMF Executive Board meeting in Washington paved the way for this decision.
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