Karachi, September 27, 2024 – The State Bank of Pakistan (SBP) announced on Friday that it has received the first tranche of the International Monetary Fund’s (IMF) $7 billion loan program.
This significant inflow comes as part of the 37-month Extended Fund Facility (EFF) recently approved by the IMF Executive Board, providing much-needed support to Pakistan’s foreign exchange reserves.
In a statement, the SBP confirmed it received Special Drawing Rights (SDR) 760 million, equivalent to approximately $1.026 billion, from the IMF. This tranche is the first installment of the larger loan package designed to bolster Pakistan’s foreign exchange position and support its economic stabilization efforts. The funds will be reflected in the SBP’s liquid reserves on Thursday, October 3, 2024, further strengthening the country’s financial outlook.
This financial support comes at a critical time for Pakistan, as the country continues to navigate the challenges posed by inflationary pressures, external debt obligations, and a volatile global economic environment. The IMF’s assistance is expected to provide a buffer for Pakistan’s balance of payments and reinforce the SBP’s ability to manage its foreign exchange reserves effectively.
Pakistan’s foreign exchange reserves have been under stress, but recent data offers signs of improvement. As of September 20, 2024, the country’s total reserves rose by $46 million, bringing the total to $14.873 billion, according to data released by the SBP. This compares to $14.827 billion recorded a week earlier, on September 13, 2024.
The SBP’s own reserves increased by $24 million during the same period, reaching $9.534 billion. This rise marks a slight improvement from the $9.51 billion reported a week earlier. Additionally, reserves held by Pakistan’s commercial banks also showed an upward trend, with an increase of $22 million, bringing their total foreign exchange holdings to $5.339 billion by the end of the week.
The first tranche from the IMF is expected to provide further stability to Pakistan’s external accounts, as the country grapples with a challenging economic environment. The additional inflows will enable the SBP to manage its currency more effectively, ensuring adequate liquidity in the financial system while meeting external debt obligations.
As Pakistan continues to implement reforms under the IMF program, the focus will remain on maintaining macroeconomic stability and addressing structural imbalances in the economy. The $7 billion loan program is seen as a critical element of this strategy, providing the necessary financial support to navigate ongoing economic challenges.
