IMF transfers $1.2 bln to State Bank of Pakistan

The International Monetary Fund (IMF) on Thursday transferred US$1.2 billion to State Bank of Pakistan (SBP) out of total $3 billion under the Stand-By Agreement (SBA) that was approved by the IMF board the previous day.

Talking to media persons, Federal Minister for Finance and Revenue, Senator Mohammad Ishaq Dar said that the balance amount of $1.8 billion would be provided after two reviews that would be held in November 2023 and February 2024.

The finance minister said that the IMF funds would help improve foreign exchange reserves, adding that in total around $4.2 billion were added to the country’s reserves during the week. 

These include $2 billion from Saudi Arabia, $1 billion from United Arab Emirates and $1.2 billion from IMF.

The state bank would issue the exact figures on Friday he said adding that the reserves are expect to  reach between $13 to $14 billion.

The minister thanked Prime Minister, Shehbaz Sharif and his economic team for their untiring efforts made during the past eight months in materializing the programme.

The minister said that the agreement was limited to 9 months to enable new elected government to take decisions for future.

He said, Pakistan was going forward in positive direction and highlighted that there was need to consolidate the gains and take the economy to growth trajectory. 

It is pertinent to mentioned here that the IMF Executive Board had approved the Stand-by Agreement (SBA) for US$ 3 billion for Pakistan. 

The staff level agreement on SBA amounting Special Drawing Rights (SDR) 2,250 million (about $3 billion or 111 percent of Pakistan’s IMF quota) was reached during the last week of June after IMF staff team led by Nathan Porter held in person and virtual meetings with the Pakistani authorities to discuss a new financing engagement for Pakistan under the arrangement.

The new SBA builds on the authorities’ efforts under Pakistan’s 2019 Extended Fund Facility supported program, which was due to expire in end-June.

According to statement issued by IMF, the 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.

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