Karachi, January 11, 2024 – In a significant development, the Executive Board of the International Monetary Fund (IMF) has granted approval for an immediate disbursement of $700 million to Pakistan.
This move comes as part of the 1st review completed by the IMF, enabling the release of Special Drawing Rights (SDR) equivalent to $700 million, further augmenting the financial assistance to Pakistan under the Stand-By Arrangement (SBA).
The Ministry of Finance confirmed that the total disbursements under the SBA have now reached $1.9 billion, signifying a substantial injection of funds into Pakistan’s economy. This financial boost is expected to play a crucial role in enhancing the country’s foreign exchange reserves and addressing balance of payment issues.
The approval from the IMF Board is particularly timely for Pakistan, as it grapples with economic challenges and strives to stabilize its financial landscape. The injection of $700 million will provide much-needed support to the country’s foreign exchange reserves, which have a direct impact on its ability to meet external obligations and manage trade imbalances.
Mohammad Sohail, CEO of Topline Securities Limited, expressed optimism about the impact of the IMF funding on Pakistan’s economic stability. He noted that in conjunction with recent inflows from multilateral lenders, the IMF disbursement is expected to contribute to the stability of the Pakistani Rupee (PKR), which has shown relative stability in recent months.
“The new tranche will also facilitate negotiations for rollovers from friendly countries, alleviating external debt repayment pressures,” commented Sohail. Rollovers, or the extension of the maturity of existing debts, can provide breathing room for countries facing debt servicing challenges, allowing for a more sustainable management of financial obligations.
The IMF’s financial support is often contingent on the implementation of economic reforms and policy measures by the borrowing country. The disbursement reflects confidence in Pakistan’s commitment to its economic reform agenda, which includes measures aimed at fiscal consolidation, structural reforms, and improving the business environment.
As Pakistan navigates the complexities of its economic landscape, the infusion of $700 million from the IMF is expected to bolster the country’s financial resilience and contribute to its ongoing efforts to achieve sustainable economic growth. The disbursement is likely to have a positive ripple effect, not only by shoring up foreign exchange reserves but also by instilling confidence among investors and international lenders in Pakistan’s economic trajectory.
