KARACHI: The International Monetary Fund’s (IMF) Executive Board on Thursday approved the first review of a $3 billion short-term financing package for Pakistan, paving the way for the release of a second tranche of $700 million for the South Asian country, the finance ministry confirmed.
The board approved a much-needed, 9-month Stand-By Arrangement (SBA) for the country last year in July to support Pakistan’s economic stabilization program. Islamabad received the first tranche of $1.2 billion along with the endorsement for the loan program the same month.
A visiting IMF delegation and Pakistani authorities reached a staff-level agreement (SLA) over the first review under the SBA in November, which was subject to the executive board’s approval to unlock the $700 million disbursement.
The decision followed a meeting of the IMF board in Washington where the international lender completed the first review of the program, the finance ministry said.
“The Executive Board of the International Monetary Fund (IMF) completed the 1st review and allows for an immediate disbursement of SDR 528 million (around $ 700 million),” Pakistan’s finance ministry wrote on social media platform X.
It added that with the latest tranche, the total disbursements under the SBA for Pakistan have amounted to $ 1.9 billion.
Pakistan cleared the first review under the SBA after taking painful economic measures, including increases in energy prices and tax burden, which led to spiraling inflation that hit 38 percent in May last year. The prices of essential commodities still remain quite elevated.
As Pakistan prepares for a national election on February 8, experts said on Thursday the country would have to chart a clear roadmap to run the economy.
“The next review of the program is important for Pakistan since it will lay down the foundation for the next IMF facility which the country will require,” Dr. Sajid Amin, deputy executive director at the Sustainable Development Policy Institute (SDPI), told Arab News.
Timely national elections and a well-thought-out economic gameplan by the next elected government will help secure the fresh IMF program and avoid any economic panic situation in the future, Amin noted.
Preparations for a follow-on program are likely to start after the conclusion of the current SBA in April 2024, as the country is scheduled to elect its new political leaders in the coming month.
Pakistan’s economic landscape has weathered a storm in recent years with fluctuating commodity prices, political turmoil and harsh blows dealt by floods.
The nation has been grappling with trade and current account deficits, mounting inflation and low foreign exchange reserves that exerted pressure on the currency that also hit historic lows against the United States dollar.
