The International Monetary Fund (IMF) said on Wednesday that its executive board had approved a $3 billion bailout programme for Pakistan and would immediately disburse about $1.2 billion to help the country.
Federal Minister for Finance and Revenue, Mohammad Ishaq Dar also shared the news about the development.
“The Executive Board of the International Monetary Fund approved a 9-month Stand-By Arrangement (SBA) for Pakistan for an amount of SDR2,250 million (about $3 billion, or 111 per cent of quota) to support the authorities economic stabilisation programme,” a short statement shared by the fund on its website said.
It added the arrangement comes at a challenging economic juncture for Pakistan. A difficult external environment, devastating floods and policy missteps have led to large fiscal and external deficits, rising inflation and eroded reserve buffers in FY23.
The approval from the IMF board comes on the heels of Saudi Arabia and the United Arab Emirates (UAE) depositing $2 billion and $1 billion, respectively, into the State Bank of Pakistan, bolstering the nation’s foreign exchange reserves.
The long-awaited decision on the Standby Arrangement, eagerly anticipated by Pakistan, arrives at a critical juncture as the country teeters on the brink of default.
The $3 billion funding, allocated over a nine-month period, exceeds initial expectations for Pakistan. It is worth mentioning that Pakistan had been awaiting the release of the remaining $2.5 billion from a $6.5 billion bailout package agreed upon in 2019, which expired in June.
Furthermore, Pakistan has assured the IMF, in a submitted letter of intent, that no new tax amnesty would be introduced within the next nine months.
