Finance Minister Ishaq Dar on Thursday announced that the International Monetary Fund (IMF) had transferred $1.2 billion to the State Bank of Pakistan (SBP)’s account as the first tranche of a $3 billion stand-by arrangement (SBA).
In a press statement, he noted that the IMF’s Executive Board had approved the SBA with Pakistan a day earlier, adding that this was part of the nine-month program that Islamabad inked with the global lender earlier this month. Recalling that it had already been decided that $1.2 billion would be provided upfront to Pakistan following the Board’s approval, he said the “balance” of $1.8 billion would be subject to two reviews due in November and February, respectively.
“So in that regard, I want to share the information that the upfront payment of $1.2 billion has been transferred by the IMF to the State Bank of Pakistan (SBP)’s account,” he said, adding this amount would shore up the country’s foreign exchange reserves. Overall, he said, the SBP’s reserves would see a jump of $4.2 billion for the week ending July 14, including the IMF’s loan; $1 billion transferred by the United Arab Emirates; and $2 billion deposited by Saudi Arabia.
“I am expecting that our forex reserves will close at $13-14 billion tomorrow. The State Bank will give the exact numbers,” he said.
Closing out his statement, Dar thanked Prime Minister Shehbaz Sharif for helping achieve the IMF staff-level agreement, which had been pending since November. He said Sharif had played a key role in convincing the IMF to agree to the new program, rather than continuing the previous one that expired on June 30 without completion. “Pakistan is on the road to development,” he said, urging all stakeholders to use the opportunity to boost the national economy.
“This [$3 billion program] has been limited to nine months so that whichever government comes into power after the elections can make its own decisions [on whether or not to approach the IMF],” he added.
The IMF Executive Board’s approval of the $3 billion program is being seen as key to Pakistan climbing out of its prevailing economic doldrums, which have seen skyrocketing inflation and a significant hit to macroeconomic indicators through reductions in industrial output and remittances.