By Staff Reporter
KARACHI: The central bank said on Tuesday that it has received the final tranche of a $1.1 billion loan from the International Monetary Fund (IMF), concluding a critical $3 billion loan program that has helped Pakistan avert a sovereign default.
The disbursement, which was part of a loan program agreed upon last summer, was approved after the IMF executive board completed its second review of Pakistan’s Stand-by Arrangement (SBA) on Monday.
The State Bank of Pakistan (SBP) confirmed the receipt of the last tranche, received on April 29, 2024.
“SBP has received SDR (special drawing rights) 828 million (around USD 1.1bn) in value on April 29, 2024, in its account from the IMF. The amount will be reflected in SBP’s foreign exchange reserves for the week ending on May 3, 2024,” the SBP said in a statement.
The recent inflow of funds is expected to bolster the SBP’s reserves to approximately $9 billion, assuming no significant external debt obligations arise. This is a notable increase from the $8 billion reserve level recorded on April 19, 2024, even after the repayment of a $1 billion Eurobond earlier in April.
The disbursement follows discussions between Prime Minister Shehbaz Sharif and IMF Managing Director Kristalina Georgieva at the World Economic Forum meeting in Riyadh, signaling the Fund’s confidence in Pakistan’s economic direction.
Islamabad is now seeking a new multi-year loan to further support macroeconomic stability and to carry out long-overdue structural reforms.
Finance Minister Mohammad Aurangzeb last month said a staff-level agreement for the new loan could be reached by early July, though the specifics of the program’s size remain under discussion. If successful, this would represent Pakistan’s 24th engagement with the IMF.
Pakistan’s economy, valued at $350 billion, continues to grapple with a persistent balance of payments crisis. The country is faced with the daunting task of repaying nearly $24 billion in debt and interest in the coming fiscal year, a figure that triples the central bank’s current foreign currency reserves.
Prime Minister Sharif on Tuesday said the release of the last installment of the IMF loan will bring “more economic stability” to the South Asian nation. “Receiving the last installment of 1.1 billion dollars from the IMF will bring more economic stability to Pakistan,” Sharif said in a statement. “The agreement with the IMF was crucial in saving Pakistan from default during the 16-month government,” said Sharif, adding that he has made difficult decisions for the economic security of his country.
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