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Pakistan’s Finance Minister Ishaq Dar said Thursday that the International Monetary Fund has transferred $1.2 billion to Pakistan, a day after the World Bank approved a $3 billion bailout program for the cash-strapped country.
The International Monetary Fund (IMF) signed a standby agreement at the end of June to give Pakistan a short-term loan for nine months, and its executive board formally approved the $3 billion bailout program on Wednesday to support the government. Efforts to stabilize the country’s faltering economy.
She said the board approved a bailout package for the country of $2.25 billion in special drawing rights (SDRs) — the reserve funds the institution deposits in the accounts of its member states, amounting to about $3 billion.
On Thursday, Finance Minister Dar announced that the World Bank had transferred $1.2 billion to the State Bank of Pakistan.
Speaking to the media, Dar said that when the Standby Arrangement (SBA) was finalized, it was decided that $1.2 billion would be awarded up front while the “remaining amount” of $1.8 billion would be delivered after two reviews in November and February.
“I want to share the information that the advance payment of $1.2 billion, which the IMF has transferred to the State Bank of Pakistan (SBP) account,” he said.
The Finance Minister said that the Executive Board of the International Monetary Fund has approved the Standby Credit Agreement with Pakistan and indicated that this is a nine-month program under which Islamabad will receive $3 billion.
He said the money would support Pakistan’s foreign exchange reserves, noting that this would also include the $1 billion transferred by the UAE the day before.
Dar said foreign reserves increased by $4.2 billion during the week after Saudi Arabia and the UAE provided $2 billion and $1 billion, respectively. “So I expect our foreign currency reserves to close at $13-14 billion by tomorrow. The State Bank will give the exact numbers,” he said.
The IMF deal effectively averted the risk of default.
The development came two weeks after the two sides reached a personnel-level agreement on the standby arrangement.
The global lender said on Wednesday that the program will focus on “implementing the FY24 budget to facilitate the fiscal adjustment Pakistan needs and ensure debt sustainability”.
“This arrangement comes at a difficult economic juncture for Pakistan. The difficult external environment, devastating floods and political missteps have resulted in large fiscal and external deficits, soaring inflation, and erosion of reserve reserves” in fiscal year 2023, “the Washington-based IMF said in the statement.
Dar said Pakistan had opted for a “smaller” Standby Credit Agreement with the global lender rather than the Ninth Review of the loan programme.
“This (program) has been set for a period of nine months so that any government that takes power after the elections can make its own decisions,” the minister said.
Pakistan’s economy has been in a free-fall mode for the past several years, causing untold stress on the poor masses in the form of uncontrolled inflation, making it almost impossible for a large number of people to make ends meet.
Pakistan has been struggling to arrange enough foreign exchange to satisfy the International Monetary Fund, which has refused to provide the remaining $2.5 billion of a $6.5 billion loan program signed in 2019 that expired on June 30 this year.
The International Monetary Fund (IMF) signed a standby agreement at the end of June to give Pakistan a short-term loan for nine months, and its executive board formally approved the $3 billion bailout program on Wednesday to support the government. Efforts to stabilize the country’s faltering economy.
She said the board approved a bailout package for the country of $2.25 billion in special drawing rights (SDRs) — the reserve funds the institution deposits in the accounts of its member states, amounting to about $3 billion.
On Thursday, Finance Minister Dar announced that the World Bank had transferred $1.2 billion to the State Bank of Pakistan.
Speaking to the media, Dar said that when the Standby Arrangement (SBA) was finalized, it was decided that $1.2 billion would be awarded up front while the “remaining amount” of $1.8 billion would be delivered after two reviews in November and February.
“I want to share the information that the advance payment of $1.2 billion, which the IMF has transferred to the State Bank of Pakistan (SBP) account,” he said.
The Finance Minister said that the Executive Board of the International Monetary Fund has approved the Standby Credit Agreement with Pakistan and indicated that this is a nine-month program under which Islamabad will receive $3 billion.
He said the money would support Pakistan’s foreign exchange reserves, noting that this would also include the $1 billion transferred by the UAE the day before.
Dar said foreign reserves increased by $4.2 billion during the week after Saudi Arabia and the UAE provided $2 billion and $1 billion, respectively. “So I expect our foreign currency reserves to close at $13-14 billion by tomorrow. The State Bank will give the exact numbers,” he said.
The IMF deal effectively averted the risk of default.
The development came two weeks after the two sides reached a personnel-level agreement on the standby arrangement.
The global lender said on Wednesday that the program will focus on “implementing the FY24 budget to facilitate the fiscal adjustment Pakistan needs and ensure debt sustainability”.
“This arrangement comes at a difficult economic juncture for Pakistan. The difficult external environment, devastating floods and political missteps have resulted in large fiscal and external deficits, soaring inflation, and erosion of reserve reserves” in fiscal year 2023, “the Washington-based IMF said in the statement.
Dar said Pakistan had opted for a “smaller” Standby Credit Agreement with the global lender rather than the Ninth Review of the loan programme.
“This (program) has been set for a period of nine months so that any government that takes power after the elections can make its own decisions,” the minister said.
Pakistan’s economy has been in a free-fall mode for the past several years, causing untold stress on the poor masses in the form of uncontrolled inflation, making it almost impossible for a large number of people to make ends meet.
Pakistan has been struggling to arrange enough foreign exchange to satisfy the International Monetary Fund, which has refused to provide the remaining $2.5 billion of a $6.5 billion loan program signed in 2019 that expired on June 30 this year.
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