First Tranche
ISLAMABAD: Acting swiftly on its board’s order, the International Monetary Fund handed over to Pakistan $1.2 billion first tranche of $3 billion stand-by arrangement today.
Finance Minister Senator Muhammad Ishaq Dar disclosed this development on Thursday, hours after the IMF’s board approved $3 billion stand-by arrangement for Pakistan.
On Wednesday, the board of the IMF ordered an immediate disbursement of $1.2 billion for Pakistan.
A foreign exchange dealer is counting the US dollar as IMF hands over $1.2 billion first tranche to Pakistan today.
Dar said that the remaining amount of $1.8 billion will be released in two quarterly tranches after evaluation of the IMF program. After general elections, the new government would deal with the IMF and the implementation of the program.
IMF’s Stand-By Arrangement for Pakistan
On Wednesday, the Executive Board of the IMF approved a 9-month Stand-By Arrangement for Pakistan for an amount of SDR2,250 million (about $3 billion/111 percent of quota) to support the authorities’ economic stabilization program.
In its statement issued on Wednesday night according to the PST, the IMF said that arrangement comes at a challenging economic juncture for Pakistan. A difficult external environment, devastating floods, and policy missteps have led to large fiscal and external deficits, rising inflation, and eroded reserve buffers in FY23.
Pakistan’s new SBA-supported program will provide a policy anchor for addressing domestic and external imbalances and a framework for financial support from multilateral and bilateral partners.
The program will focus on the following aspects:
(1) the implementation of the FY24 budget to facilitate Pakistan’s needed fiscal adjustment and ensure debt sustainability while protecting critical social spending; (2) a return to a market-determined exchange rate and proper FX market functioning to absorb external shocks and eliminate FX shortages;
(3) an appropriately tight monetary policy aimed at disinflation; and
(4) further progress on structural reforms, particularly with regard to energy sector viability, SOE governance, and climate resilience.
Saudi Arabia, UAE deposit $3 billion in SBP’s account
Earlier, Saudi Arabia and the United Arab Emirates deposited $3 billion into the State Bank of Pakistan’s account. Saudi Arabia deposited $2 billion on Tuesday while UAE deposited $1 billion on Wednesday evening.
With this development, the national foreign exchange reserves of Pakistan exceeded $12 billion on Wednesday.
Saudi Arabia and UAE deposited money under the external financial plan of the Pakistan government to unlock the IMF bailout program.
Last week, the government submitted a financing plan of $8 billion to the International Monetary Fund (IMF). The government submitted the plan ahead of the IMF board meeting on July 12. Before the board meeting, the IMF accepted the plan.
China will provide financing up to $3.5 billion to Pakistan, underscoring its commitment to deepening strong bilateral relations in the economic, trade, and financial sectors.
China will roll over safe deposits of $2 billion and reschedule $1.5bn of commercial banks.
Notably, China’s support during the last few months when the country was facing difficult economic circumstances shows China’s commitment to deepening the relations between both countries.
Additionally, the Asian Development Bank (ADB) and the World Bank will contribute $500 million each.
Furthermore, the government will obtain $3 billion through the IMF program, signed between the International Monetary Fund (IMF) and Pakistan on June 30.
