Secretary of State Antony Blinken welcomed the IMF deal with Pakistan that revived the stalled program.
He said the United States stood by the Pakistani people during these hard times. Blinken said the International Monetary Fund’s (IMF) approval of a program will support economic revival in Pakistan.
He, therefore, urged Pakistan to continue working with the IMF to complete macroeconomic reforms and achieve sustainable economic recovery.
Earlier, Prime Minister Shehbaz Sharif said that the IMF’s $3 billion stand-by arrangement was a major step forward in the government’s efforts to revive the economy.
Premier said, “It will bolster Pakistan’s economic position to overcome economic challenges. He will also give the next government the fiscal space to chart the way forward.”
IMF hands over $1.2 billion to Pakistan
Earlier, acting swiftly on its board’s order, the IMF handed over $1.2 billion to Pakistan as the first tranche of a $3 billion loan on Thursday.
Finance Minister Ishaq Dar disclosed this development on Thursday, hours after the IMF’s board approved the stand-by arrangement.
On Wednesday, the board of the IMF ordered an immediate disbursement of $1.2 billion for Pakistan.
A foreign exchange dealer is counting the US dollar as the IMF hands over the $1.2 billion first tranche to Pakistan today.
Dar said that the remaining amount of $1.8 billion will be released in two quarterly tranches after the evaluation of the IMF program. After the general elections, the new government would deal with the IMF and the implementation of the program.
IMF’s Stand-By Arrangement for Pakistan
On Wednesday, the Executive Board of the IMF approved a 9-month Stand-By Arrangement for Pakistan for an amount of SDR2,250 million (about $3 billion/111 percent of quota) to support the authorities’ economic stabilization program.
In its statement issued on Wednesday night according to the PST, the IMF said that 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.
Pakistan’s new SBA-supported program will provide a policy anchor for addressing domestic and external imbalances and a framework for financial support from multilateral and bilateral partners.
The program will focus on the following aspects:
(1) the implementation of the FY24 budget to facilitate Pakistan’s needed fiscal adjustment and ensure debt sustainability while protecting critical social spending; (2) a return to a market-determined exchange rate and proper FX market functioning to absorb external shocks and eliminate FX shortages;
(3) an appropriately tight monetary policy aimed at disinflation; and
(4) further progress on structural reforms, particularly regarding energy sector viability, SOE governance, and climate resilience.
