IMF to release second tranche of $450m in December

ISLAMABAD: The International Monetary Fund (IMF) is expected to release the second tranche of $450 million to Pakistan after the approval of its board of directors next month.
The fund completed its first quarterly review under the $6 billion bailout program during its delegation’s visit to Islamabad from Oct. 28 to Nov. 8, and will now submit its report to the board of directors to get its endorsement before releasing the second tranche.
“The release of the second tranche will take place once the first review under the IMF-supported program is approved by the IMF Board of Directors,” Teresa Daban Sanchez, IMF Resident Representative in Pakistan, told Arab News on Monday.
She said that a calendar of the reviews is explicitly mentioned in the program documents and “the first one is tentatively scheduled for the first part of December.”
Pakistan secured the $6 billion loan from the IMF in July this year – its 13th bailout program since the late 1980s – to stave off a balance of payments crisis. The IMF had granted the loan by imposing tough conditions including massive economic reforms and significant improvement in annual tax collection.
The government of Prime Minister Imran Khan, who took power in August, obtained temporary relief from close allies such as Saudi Arabia, the United Arab Emirates and China with short-term loans worth more than $10 billion to buffer foreign currency reserves and ease pressures on the country’s current account. Economists, however, called an IMF bailout inevitable as Pakistan faced growing fiscal crunch.
The fund has now expressed satisfaction over the economic performance of the country as the government has significantly narrowed trade and fiscal deficits.
“The government policies have started to bear fruit, helping to reserve the buildup of vulnerabilities and restore economic stability. The external and fiscal deficits are narrowing, inflation is expected to decline and growth although slow, remains positive,” the IMF said in a statement after completion of the first review.
Pakistan had already received an upfront disbursement of $991 million on the completion of all prior actions before signing the fund program in July. The inflow of the second tranche would help boost the country’s foreign exchange reserves which were recently recorded at $15.5 billion.
Pakistan’s foreign exchange reserves have increased by $1.2 billion to $8.4 billion of reserves with the State Bank of Pakistan in four months (July to October) of the current fiscal year. Likewise, the government has paid $2.1 billion against previous loans during the same period.