$165 million
ISLAMABAD: Pakistan is set make repayment to the IMF of $165 million under the General Resources Account (GRA) Repurchase (EFF) on Sept 29, 2023.
This payment represents a significant aspect of the ongoing economic cooperation with the IMF.
This repayment is tied to a significant development that occurred on June 30, 2023 when Pakistan reached a Staff-Level Agreement with the IMF.
This agreement was based on a nine-month Stand-by Arrangement (SBA) with a value of SDR2,250 million, equivalent to approximately $3 billion or 111% of Pakistan’s IMF quota.
This arrangement played a crucial role at a time when Pakistan was facing severe financial challenges and was on the verge of default.
For those unfamiliar with the GRA, it is designed to address the diverse balance of payment needs of member countries and includes various lending programs with different disbursement schedules and maturities.
In Pakistan’s case, this repayment represents a principal repayment (repurchase) requirement arising from its outstanding GRA credit.
The GRA charges, which accumulate daily on the outstanding balance, are payable quarterly. The scheduled repayment underscores Pakistan’s commitment to meeting its international financial obligations promptly.
What are Special Drawing Rights (SDR)?
SDR is an international reserve asset that is not a currency but derives its value from a basket of five currencies: the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.
Under current IMF procedures, each U.S. dollar equivalent is calculated based on mid-market rates provided to the IMF by the Bank of England, using spot exchange rates observed around noon London time.
The value of the US dollar in terms of the SDR is rounded to six significant digits. The Federal Reserve Bank of New York and the European Central Bank serve as backup providers for these exchange rates.
After the payment of $165 million, the State Bank of Pakistan (SBP) reserves will decrease to $7.53 billion. The foreign exchange reserves held by the SBP were at $7.7 billion during the week ending on September 15, 2023.
It’s worth noting that the upcoming IMF review scheduled for November will be a critical milestone in Pakistan’s journey toward economic recovery.
