SBP receives $1.1b IMF tranche
The State Bank of Pakistan (SBP) Tuesday confirmed it had received the final $1.1 billion tranche from the International Monetary Fund under the stand-by arrangement.
The SBP said it received Special Drawing Rights (SDR) 828 million — equivalent to $1.1 billion in value — “following the successful completion of the second review by the Executive Board of IMF under Stand By Arrangement (SBA)”
SDRs are international reserve assets created by the IMF in 1969 and are allocated to member states to supplement existing official reserves.
The central bank said that the disbursement will be reflected in SBP reserves for the week ending on May 3, 2024.
Last week, the SBP said its foreign exchange reserves dropped by $74 million to $7.981 billion in the week ending on April 19 because of external debt repayments. The country’s foreign reserves fell by $93 million to $13.281 billion. The reserves of commercial banks also decreased by $20 million to $5.299 billion, as per the SBP.
On Monday, the Fund had approved the immediate disbursement of approximately $1.1bn to Pakistan. Its executive board met in Washington and completed the second review under the SBA, bringing total disbursements under the arrangement to about $3 billion.
All board members favoured releasing the last installment except India, which abstained.
“The completion of the second and final review reflects the authorities’ stronger policy efforts under the SBA, which have supported the stabilisation of the economy and the return of modest growth,” the IMF said in a statement.
“To move Pakistan from stabilisation to a strong and sustainable recovery the authorities need to continue their policy and reform efforts, including strict adherence to fiscal targets,” the statement added.
The Fund also reminded Pakistan that while doing so, it also needed to protect the vulnerable from the possible impact of such reforms. The IMF also emphasised the need to adhere to “a market-determined exchange rate to absorb external shocks; and broadening of structural reforms to support stronger and more inclusive growth.
Last year, the IMF Executive Board had approved the nine-month SBA arrangement with Pakistan “to support its economic stabilisation programme”. The approval had allowed for an immediate disbursement of $1.2bn, with the rest phased over the programme’s duration — subject to two quarterly reviews.
Finance Minister Muhammad Aurangzeb has said that Pakistan is now eyeing a “longer and larger” economic bailout package with the IMF. The Fund has said it will support formulating a new economic programme for Pakistan if the government seeks one.