Pakistan’s SBP Receives $1.1 Billion IMF Funding

The State Bank of Pakistan (SBP) has received approximately USD 1.1 billion from the International Monetary Fund (IMF), following the approval of the final tranche of Pakistan’s USD 3 billion Stand-By Arrangement (SBA) by the global lender, Geo News said.

Pakistan announced on Tuesday that the IMF’s executive board approved a USD 1.1 billion loan tranche, marking the completion of the second bailout package. The funds are expected to be included in the SBP’s foreign exchange reserves for the week ending on May 3.

This latest disbursement represents the third and final segment of a USD 3 billion standby arrangement with the IMF, crucial for Pakistan to avert a sovereign default, especially with the existing arrangement set to conclude this month. The SBP reported last week that its foreign exchange reserves declined by USD 74 million to USD 7.981 billion for the week ending April 19 due to external debt repayments. Additionally, Geo News reported that the country’s foreign reserves dropped by USD 93 million to USD 13.281 billion.

As per the SBP, the reserves of commercial banks witnessed a decrease of USD 20 million, reaching USD 5.299 billion. On Monday, the IMF issued a statement confirming the completion of the second and final review of Pakistan’s economic reform program supported by the SBA.

“The board’s decision allows for an immediate disbursement of SDR 828 million (around USD 1.1 billion), bringing total disbursements under the arrangement to SDR 2.250 billion (about USD 3 billion).”

This marks the third and final installment of a USD 3 billion SBA with the IMF, obtained by Pakistan last summer to prevent a sovereign default, as per Geo News. Looking forward, Pakistan is aiming for a new, larger IMF loan with an extended duration. Finance Minister Muhammad Aurangzeb has suggested that Islamabad could reach a staff-level agreement on the new program as soon as July.

The emphasis is on obtaining a loan spanning at least three years to strengthen macroeconomic stability and enact essential structural reforms. However, the precise size of the program has not been disclosed.

IMF, the global lender, stated that the nine-month SBA, sanctioned by the executive board on July 12 of last year, effectively served as a policy anchor to tackle domestic and external imbalances. It also provided a framework for financial assistance from multilateral and bilateral partners.