The International Monetary Fund (IMF) has updated its website, stating its Executive Board will take up a review of Pakistan’s ongoing Stand-by Arrangement (SBA) on Jan. 11.
During the meeting, the board would review the staff-level agreement inked in November between Pakistan and IMF staff following the first review of the ongoing $3 SBA. If approved, the meeting could trigger the disbursement of the next $700 million tranche, key to shoring up Pakistan’s dwindling foreign exchange reserves.
The board was initially expected to take up Pakistan’s case in December, but the process was delayed, in some part due to the Christmas and New Year’s holidays. Following the anticipated approval this month, the country is expected to start preparations for the second review to help unlock the remaining $1.8 billion that remain in the SBA. Whichever new government forms after the upcoming general elections would likely undertake this process. The current SBA is set to conclude in mid-April.
Once this SBA concludes, the country would likely immediately proceed to a new long-term bailout, as indicated by interim Finance Minister Shamshad Akhtar. Despite significant strides in recent months, the country continues to experience record-high inflation and minimal inflows, requiring the support of multilateral institutions to avert economic crisis.
While some IMF officials have recently voiced confidence in Pakistan’s improving economic indicators, projections of the global lender suggest the country will continue to walk a tightrope in the near-term. Similarly, the World Bank recently warned that Pakistan’s economic system had “failed,” adding it required significant immediate reforms to ensure the impoverished were protected while the elite paid their due share through taxes to move past its current inflection point.