IMF approves $3b bailout program for Pakistan

Islamabad: The International Monetary Fund's executive board on Wednesday granted approval to a $3 billion bailout program for Pakistan, providing immediate disbursement of approximately $1.2 billion to assist the country.

This decision comes following the Standby Arrangement reached between the IMF and Pakistan on June 29, aimed at alleviating the nation's financial crisis.

In a statement, the IMF highlighted that Pakistan is currently facing a challenging economic situation, marked by adverse external conditions, devastating floods, and policy errors. These factors have contributed to substantial fiscal and external deficits, escalating inflation, and depleted reserve buffers during the fiscal year 2023.

The approval from the IMF board was necessary to initiate the first installment of funds, with subsequent disbursements scheduled to follow in due course.

This endorsement from the IMF coincides with the recent deposits of $2 billion by Saudi Arabia and $1 billion by the United Arab Emirates into the State Bank of Pakistan, bolstering the country's foreign exchange reserves.

The $3 billion funding, to be distributed over nine months, exceeds Pakistan's initial expectations. Previously, the country had been awaiting the release of the remaining $2.5 billion from a $6.5 billion bailout package agreed upon in 2019, which expired in June.

Prime Minister Shehbaz Sharif commented on this development, stating that the approval of the $3 billion agreement represents a significant stride towards stabilizing the economy and achieving macroeconomic stability. He emphasized that this milestone strengthens Pakistan's economic position and grants the next government the fiscal space needed to navigate the path ahead.

The approval of Stand-by Agreement of $3 billion by the IMF's Executive Board a little while ago is a major step forward in the government's efforts to stabilise the economy and achieve macroeconomic stability. It bolsters Pakistan's economic position to overcome immediate- to…

— Shehbaz Sharif (@CMShehbaz) July 12, 2023

The Prime Minister credited Finance Minister Ishaq Dar and his team at the Ministry of Finance for their diligent efforts, acknowledging their hard work. He also expressed gratitude to the IMF Managing Director and her team for their support and cooperation throughout the process.

Ishaq Dar also tweeted and confirmed the development regarding approval of the program. 

IMF Executive Board approved today Stand-by Agreement (SBA) for US$ 3 billion for Pakistan! https://t.co/eU6naaALBi

— Ishaq Dar (@MIshaqDar50) July 12, 2023