ISLAMABAD: The International Monetary Fund (IMF) said on Friday that steadfast implementation of policies was “critical” for Pakistan to stabilize its economy and balance of payments needs, days after the South Asian country negotiated a $3 billion deal with the global lender to avoid a default on its loan obligations.
Pakistan on Thursday received $1.2 billion from the IMF after the lender approved the crucial bailout that had been stalled since November last year.
The recent approval of the agreement by the IMF executive board came as a sigh of relief for the cash-strapped South Asian nation, amid concerns that it might default on its external financial obligations.
But IMF spokesperson Julie Kozack said the stand-by arrangement (SBA) between Pakistan and the IMF came at a challenging juncture and required steadfast implementation of fiscal policies.
“It (SBA) aims to stabilize the economy & address the needs of the Pakistani people,” she said on Twitter. “Steadfast implementation is critical to address its large financing needs & support the most vulnerable.”
Along with the IMF funds, Pakistan this week received $2 billion deposits from Saudi Arabia and $1 billion from the UAE on Tuesday and Wednesday, respectively.
After the latest inflows, Pakistan’s overall foreign exchange reserves are expected to hit the $13-14 billion mark from the $9.8 billion figure recorded on July 7. Pakistan’s official reserves are expected to increase to $8-9 billion.
Kozack said the relatively shorter program provided time for Pakistan to implement the policies to strengthen its domestic and external economic situation, while supporting sustainability.
“Of course, resolving Pakistan’s structural challenges will likely require continued reforms over the medium term, underpin the needed economic transformations to strengthen inclusive growth prospects, and to create an environment conducive to renewed private capital inflows,”
“We, at the IMF, we always stand ready to work with Pakistan and the Pakistani government on these efforts to restore sustainability and economic stability.”
The South Asian country has been witnessing an economic meltdown for more than a year, with its currency depreciating to record lows against the dollar owing to the low forex reserves.
Pakistan last year banned imports to prevent the outflow of dollars in a bid to keep the frail economy afloat.
However, Pakistan’s currency, bonds and stocks rallied on Thursday after the South Asian country managed to secure the much-needed $4.2 billion in funds from the IMF and Gulf states, reflecting a boost in local and international investors’ confidence in Pakistan.
