ISLAMABAD: The executive board of the International Monetary Fund today approved the disbursement of $1.17 billion loan to Pakistan under the seventh and eighth reviews. The amount will be transferred into the account of the State Bank of Pakistan within this week, Finance Ministry officials said.
The board of the IMF, which met in Washington on Monday morning according to USA time (Aug 29) also approved the staff level agreement between Pakistan government and the IMF, which led to the approval for release of seventh and eighth tranches involving $1.17 billion.
Although the Pakistan Tehrik-e-Insaf governments in Punjab and Khyber Pakhtunkhwa made their last ditch efforts to ditch Pakistan-IMF loan programme on the day the board of the fund was holding its meeting, these efforts, nonetheless, ended in failure as IMF board has given its approval for the resumption of loan to Pakistan.
Importantly, many international economic think-tank believe that Pakistan will evade short-term default after obtaining loan from the International Monetary Fund.
After the board’s approval, Pakistan will receive $1.17 billion from the IMF within this week.
Earlier, the Columbia Threadneedle Investments, Tellimer Limited and Natixis SA believed that Pakistan will get approval of $1.17 billion loan approval from the IMF board on Monday.
The leadership expects the Washington-based lender to resume the six months-long stalled $6 billion bailout programme; however, a rally in the nation’s assets may fizzle out amid escalating political tensions in Pakistan which is evident from the latest efforts of PTI leader and former finance minister Shaukat Tarin who motivated finance ministers of Punjab and KP to write letters to IMF ahead of board meeting to inform them (IMF officials) that both the provincial governments were not going to follow the IMF programme committed in the earlier agreements.
“I do think the bulk of the market rally is already in the price,” said Eng Tat Low, an emerging-market sovereign analyst at Columbia Threadneedle in Singapore.
“I expect the next 12 months to be challenging with the general elections looming while the risk of worsening political backdrop is definitely still considerable and elevated.”
Pakistan’s dollar bonds have been the top performers in emerging markets in August after Belarus. Meanwhile, the rupee also soared above its peers as investors cheer the prospect of IMF funds.
