IMF to conduct initial economic review of $3 billion Stand-By Arrangement for Pakistan in November

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A delegation from the International Monetary Fund (IMF) is scheduled to visit Pakistan in November. This visit marks the inaugural economic review for the US$3 billion Stand-By Arrangement (SBA) for Pakistan.

Key negotiations are anticipated to take place with the proposed caretaker government within the framework of this new loan program.

The IMF delegation’s primary focus will involve a comprehensive review of Pakistan’s economic performance spanning from July to September.

Sources indicate the disbursement of the next installment amounting to $700 million from the $3 billion loan, with a projected receipt of $1.8 billion funds by March 2024, as part of the ongoing engagement with the IMF.

Loan program key points

The program will focus on the implementation of the FY24 budget to facilitate Pakistan’s needed fiscal adjustment and ensure debt sustainability, while protecting critical social spending.

A return to a market-determined exchange rate and proper FX market functioning to absorb external shocks and eliminate FX shortages and an appropriately tight monetary policy aimed at disinflation; and further progress on structural reforms, particularly with regard to energy sector viability, SOE governance, and climate resilience.

The Executive Board’s approval allows for an immediate disbursement of SDR894 million (or about US$1.2 billion). The remaining amount will be phased over the program’s duration, subject to two quarterly reviews.

The finance ministry officials were optimistic that Pakistan might get $1.2 billion as the first tranche from the standby agreement. Islamabad had assured the IMF of the financing gap of $8.2 billion, the officials said further.

They claimed that the IMF is satisfied with Pakistan’s proposed financing plan.

Apart from the IMF, the World Bank and the Asian Development Bank will also extend help to the country. The officials said there is also a likelihood of receiving financing of $3.5 billion from China this year.

Additionally, financing worth $2 billion from Saudi Arabia and $1 billion from the UAE has also been obtained.

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