IMF transfers $1.2 billion funds to SBP

ISLAMABAD: International Monetary Fund (IMF) has transferred $1.2 billion to the account of State Bank of Pakistan (SBP), a day after the global lender approved the agreement.

In a video statement, Finance Minister Ishaq Dar said the IMF’s Executive Board had approved the standby-agreement under which the country would receive $3 billion in nine months.

The finance minister said that the IMF was decided to give $1.2bn upfront while the “balance amount” of $1.8bn would be handed over after two reviews in November and February.

“So in that regard, I want to share the information that the upfront payment of $1.2bn, the IMF has transferred it to the State Bank of Pakistan’s (SBP) account,” he said.

He said that the funds would shore up Pakistan’s foreign exchange reserves. He said that there has been a $4.2bn increase in the SBP’s reserves during the week.

Dar has said that he expects Pakistan’s foreign exchange reserves to rise to $13-14 billion by tomorrow (Friday) and the central bank will show the exact figures reflecting in their account.

Ishaq Dar also took the opportunity to thank Prime Minister Shehbaz Sharif, saying that the process with the IMF had been ongoing for the past eight months. He said Pakistan opted for a “smaller” SBA with the IMF instead of the ninth review of the loan programme.

“This (programme) has been limited to nine months so that whichever government comes into power after the elections, can make its owns decisions.”

Saudi Arabia has also deposited $2 billion into the account of the State Bank of Pakistan (SBP) followed by S1 billion deposit by the United Arab Emirates (UAE) as part of its financial commitments. 

The IMF Executive Board held a key vote on Pakistan’s bailout programme during a meeting in Washington. The Fund has approved the release of the first tranche of $1.2 billion immediately.

The global lender said that the programme would focus on the “implementation of the FY24 budget to facilitate Pakistan’s needed fiscal adjustment and ensure debt sustainability”. The approval allows for an immediate disbursement of $1.2 billion. “The remaining amount will be phased over the programme’s duration, subject to two quarterly reviews,” it added.

“The Executive Board of the International Monetary Fund (IMF) approved a 9-month Stand-By Arrangement (SBA) for Pakistan for an amount of SDR2,250 million (about $3 billion, or 111 percent of quota) to support the authorities’ economic stabilization program,” the IMF said in a statement.