Pakistan receives first tranche of $1 billion from IMF

Pakistan receives first tranche of $1 billion from IMF
Karachi: The State Bank of Pakistan (SBP) on Tuesday night received some one billion dollars from the International Monetary Fund (IMF) as the first tranche of a bailout package for balance of payment support.

SBP confirmed to Business Recorder that the SBP has received IMF first tranche of $991.4 million which is equivalent to SDR 716 million.

The arrival of inflows from the IMF will help strengthen the depleting foreign exchange reserves of the country and ease pressure on the external account.

According to details, Pakistan will get $2 billion annually, under the Extended Fund Facility (EFF), for the period of three years. The amount would help Pakistan stabilise its crippling state of economy and recover from fiscal debt and inflation.

On the other hand, the country is also expected to receive $2 to $3 billion from the Asian Development Bank (ADB) and the World Bank Group in this month.

Sources familiar with the matter told the media that Pakistan’s foreign exchange reserves would be boosted in the short term up to $17 to $18 billion.

Upon receiving those amounts, economists are of the view that rupee would achieve sustainability against the greenback, and help Pakistan to pay its external debts, recover from its fiscal deficit and keep foreign exchange reserves to the equivalent of 3 months of imports.

Pakistan’s government and the IMF had already signed staff-level agreement on May 12.

The government agreed on the loan program and announced plans to slash civil expenditures and freeze military spending while promising to substantially raise revenues to stem a yawning fiscal deficit, and pledging to collect 5.5 trillion rupees in taxes.

"Pakistan is facing a challenging economic environment, with lackluster growth, elevated inflation, high indebtedness and a weak external position," the result of a "legacy" of uneven policies, IMF mission chief Ernesto Ramirez Rigo said in a statement.