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- April 30, 2024
- Kainat Shakeel
- 0
On Tuesday, the State Bank of Pakistan (SBP) announced that it has obtained the last $1.1 billion installment from the International Monetary Fund as part of the stand-by agreement. On Monday, The Fund authorized the quick transfer of roughly $1.1 billion to Pakistan. During a meeting in Washington, its executive board finished the second SBA review, increasing the total amount disbursed under the arrangement to almost $3 billion. All members of the board, except India, were in favor of the release of the last installment.
The International Monetary Fund (IMF) has stated Pakistan’s economic situation, stating that the authorities’ efforts to implement the Stand-By Arrangement (SBA) have resulted in the stabilization of the economy and modest growth. The statement also emphasized the importance of the government’s fiscal targets and continued policy and reform efforts to ensure a sustainable economic recovery. Pakistan was also reminded by the Fund that in the process of protecting the weak from the potential effects of these reforms, it was equally necessary to safeguard them. The IMF further emphasized the need for widening structural reforms to enable stronger and more inclusive growth and sticking to “a market-determined exchange rate to absorb external shocks.”
Following receipt of the tranche from the Fund, the SBP released a statement today. The IMF credited SBP’s account with SDR (special drawing rights) of SDR 828 million, or almost US$1.1 billion, on April 29, 2024. SBP’s foreign exchange reserves for the week ending on May 3, 2024, will reflect the amount, according to the announcement. Created by the IMF in 1969, special drawing rights (SDRs) are global reserve assets that are distributed to member governments to augment their actual reserves.
A day earlier, during the World Economic Forum’s (WEF) special conference in Riyadh, PM Shehbaz met with IMF Managing Director (MD) Kristalina Georgieva and assured her that the government was completely committed to getting Pakistan’s economy “back on track.” This was the reason behind the IMF’s acceptance. As to the report by state-run Radio Pakistan, Prime Minister Shehbaz promised more economic stability in Pakistan upon the release of the last tranche in a statement that was made public today. To “avoid Pakistan from defaulting during the sixteen months of his tenure in the previous government,” he was cited as adding that the SBA deal with the IMF had proven to be vital.
The administration is working hard to strengthen the economy and promote development in the nation, he said, adding that “tough decisions taken for the economic security of Pakistan are yielding positive results now in the form of economic stability.” Insisting that taking out a loan is not a success, the prime minister said that Pakistan will only succeed when it can eliminate its debt. He expressed optimism that, “if we continue to work in the right direction,” the nation would break free from its debt cycle and “enter a prosperous era.” Additionally, PM Shehbaz expressed gratitude to the Fund for helping the nation through hard times.
The nine-month SBA agreement with Pakistan was authorized by the IMF Executive Board last year “to support its economic stabilization program.” $1.2 billion could be disbursed immediately under the decision, with the remaining funds being phased in throughout the program and subject to two quarterly reviews. According to Finance Minister Muhammad Aurangzeb, Pakistan is currently considering an IMF economic rescue package that is “longer and larger.” If the government of Pakistan wants to create a new economic plan, the Fund has stated that it will assist in its creation.