The International Monetary Fund (IMF) has deposited $1.2 billion in the account of the State Bank of Pakistan (SBP), raising hopes for the cash-strapped country’s economic stability, as it It has been on the brink of default for several months.
The IMF’s executive board late last night approved a $3 billion standby agreement (SBA) under the nine-month program, which came after eight months of tough negotiations on fiscal discipline.
Pakistan reached a staff-level deal with the lender last month, securing a short-term deal that brought more than expected funding to the crisis-hit country of $230 million.
In a televised address from Islamabad, Finance Minister Ishaq Dar said that Pakistan would get the remaining amount after two reviews – the second in November and the third in February.
This inflow will increase Pakistan’s foreign exchange reserves, he said, adding that the central bank’s reserves have increased by about $4.2 billion during the current week.
The finance minister said that our foreign exchange reserves will close at around $13-14 billion on July 14 and the State Bank will release the exact figures later. Program
The prime minister played a key role in persuading the IMF to agree to the new program as he held repeated talks and phone calls with the lender’s chief in Paris.
In a statement, the IMF said its executive board had given the green light to the nine-month standby arrangement “to support the authorities’ economic stabilization programme”.
“Pakistan is on the path of development […] we all should try to reap the benefits through it,” Dar added.
The South Asian nation is grappling with a balance of payments crisis as it tries to service non-performing external debt amid a fraught political environment — following the ouster of the country’s former prime minister Imran Khan.
Inflation has soared, the rupee has hit a record low against the dollar, and the country is struggling to afford imports, leading to a sharp decline in industrial output.
Pakistan has brokered nearly two dozen arrangements with the IMF, most of which have been incomplete.
A few days before the decision was passed, Pakistan had received $3 billion in deposits from Saudi Arabia and the United Arab Emirates.
The remittances from the two Gulf countries pushed Pakistan’s foreign reserves to $7.5 billion, more than double the account balance last week.
