In a significant development for Pakistan’s troubled economy, the International Monetary Fund (IMF) has transferred $1.2 billion to the State Bank of Pakistan (SBP) as part of a $3 billion loan agreement. Finance Minister Ishaq Dar confirmed the news in an address to media.
Under the terms of the agreement, the IMF’s Executive Board approved a standby agreement with Pakistan for a nine-month program.
Minister Dar stated that the upfront payment of $1.2 billion has been transferred to the SBP’s account. He emphasized that this payment, combined with the $1 billion previously transferred by the United Arab Emirates, would bolster Pakistan’s foreign exchange reserves.
Minister Dar also expressed optimism that Pakistan’s forex reserves would reach $13-14 billion by the following day, with the State Bank of Pakistan providing the exact figures.
The SBP later confirmed that Pakistan’s foreign exchange reserves increased by $61 million to $4,524 million in the week ending July 7, compared to $4,462.7m in the previous week.
Furthermore, the central bank disclosed that inflows of $2 billion from the Kingdom of Saudi Arabia, $1 billion from the United Arab Emirates, and approximately $1.2 billion from the IMF would be reflected in its forex reserves for the week ending July 14, 2023.
Minister Dar expressed his gratitude to Prime Minister Shehbaz Sharif and highlighted that the shorter nine-month program was chosen to allow the incoming government, following the elections, to make its own decisions.
He noted that negotiations with the IMF had been ongoing for the past eight months, culminating in this significant loan agreement.
This financial support from the IMF, combined with contributions from the United Arab Emirates and Saudi Arabia, is expected to provide much-needed stability and liquidity to Pakistan’s struggling economy.
