Pakistan receives $700 million tranche from International Monetary Fund (IMF)
In a noteworthy development for Pakistan's economic
recovery, the International Monetary Fund (IMF) has disbursed a $700 million
tranche as part of the agreed-upon bailout program, as confirmed by State Bank
of Pakistan (SBP) Governor Jameel Ahmed on Wednesday.
The disbursement follows the approval by the IMF Executive
Board after completing its first review last week, bringing the total disbursements
under the $3 billion Standby Arrangement (SBA) to approximately $1.9 billion.
Antoinette Sayeh, Deputy Managing Director and Chair, remarked on tentative
signs of economic activity picking up and external pressures easing.
IMF
adjusts Pakistan's foreign loan requirement to $25 billion
The nine-month SBA, approved by the Executive Board in July,
serves as a policy anchor for addressing domestic and external balances and
provides a framework for financial support from multilateral and bilateral
partners.
To secure the bailout, Pakistan implemented stringent IMF-requested
measures, including a revamped budget, a record interest rate hike, and
significant increases in electricity and gas prices. Additionally, Pakistan
raised $1.34 billion in new taxation under the bailout deal, contributing to an
all-time high inflation of 38% year-on-year in May, which is still above 30%.
IMF
forecasts ongoing need for substantial loans and grants in Pakistan
“The authorities took challenging steps to bring both
electricity and natural gas prices closer to costs in 2023. Continuing with
regularly-scheduled adjustments and pushing cost-side power sector reforms are
vital to improving the sector’s viability and protecting fiscal
sustainability,” noted Sayeh.
With the IMF loan secured, analysts anticipate Pakistan to
seek additional multilateral and bilateral loans to support its economic
recovery.
Source: The News