Islamabad, 14 July, 2023 (GNP): The International Monetary Fund (IMF) has announced that the recently approved $3 billion loan programme will play a vital role in stabilizing Pakistan’s economic situation and meeting its balance of payments needs.
The IMF’s executive board formally approved the USD 3 billion bailout programme on Wednesday. The bailout package amounts to $2.25 billion in Special Drawing Rights (SDRs), equivalent to approximately $3 billion or 111% of Pakistan’s quota.
Finance Minister Ishaq Dar confirmed that the initial tranche of $1.2 billion has been deposited in the central bank, while the remaining $1.8 billion will be disbursed following two reviews in November and February.
Furthermore, IMF spokesperson Julie Kozack in a press briefing on Thursday said the Stand-By Arrangement (SBA) for Pakistan comes at a “challenging juncture.” It aims to support the government’s economic stabilization plan and policies, with due protection for the most vulnerable, and providing a framework for financing from multilateral and bilateral partners.
She stressed the importance of steadfast policy implementation for the coming years. “This will be critical for the success of the programme and, of course, ultimately, for aiding and supporting the people of Pakistan,” she added.
The spokesperson claimed that the relatively short programme will fulfil the country’s current balance of payments needs and provides time for Pakistan to implement policies critical to strengthening the domestic external economic situation.
While acknowledging the need for continued reforms in the medium term to address the country’s structural challenges, the spokesperson assured that the IMF is committed to work with Pakistan to restore sustainability and economic stability.
In addition to IMF loan programme, Pakistan is set to draw in US$5.6 billion in additional financing. The new funding includes US$3.7 billion of commitments from bilateral partners including Saudi Arabia and the United Arab Emirates, IMF’s mission chief for Pakistan, Nathan Porter said.
The approval of the IMF loan programme has provided relief to Pakistan, resulting in a strengthened rupee and stock market. The business community welcomes the bailout programme, recognizing its significance for the country’s economic stability and the inflow of external funding.
As Pakistan enters a period of stability, it is essential for the government to seize this opportunity to implement concrete measures aimed at improving the economy, expanding the tax base, and ensuring long-term debt sustainability and growth.