Pakistan gets $700m IMF bailout tranche

Karachi: Pakistan has successfully secured a $700 million disbursement from the International Monetary Fund (IMF) as part of its bailout initiative, as announced by State Bank of Pakistan (SBP) Governor Jameel Ahmed on Wednesday.

Taking to X, the central bank said, “1/2 #SBP has received SDR 528 million (equivalent to $705.6 million) in value 16th January 2024 from IMF following successful completion of the first review by the Executive Board of IMF under Stand By Arrangement (SBA),”

1/2 #SBP has received SDR 528 million (equivalent to $705.6 million) in value 16th January 2024 from IMF following successful completion of the first review by the Executive Board of IMF under Stand By Arrangement (SBA).

— SBP (@StateBank_Pak) January 17, 2024

In another Tweet, the SBP said, “UAE has confirmed rollover of its two deposits of US$1.0 billion each placed with State Bank of Pakistan for another one year which were maturing in January 2024. #SBP,”.

UAE has confirmed rollover of its two deposits of US$1.0 billion each placed with State Bank of Pakistan for another one year which were maturing in January 2024.#SBP

— SBP (@StateBank_Pak) January 17, 2024

2/2 This disbursement will be reflected in SBP Reserves for the week ending on 19th January 2024.

— SBP (@StateBank_Pak) January 17, 2024

The loan approval followed the completion of the initial review by the IMF Executive Board last week, contributing to a total disbursement of around $1.9 billion under the $3 billion Standby Arrangement (SBA).

Antoinette Sayeh, Deputy Managing Director and Chair, expressed positivity after the board's approval, stating, "There are now tentative signs of activity picking up and external pressures easing."

The Executive Board sanctioned the nine-month SBA on July 12 last month, aiming to establish a policy framework addressing both domestic and external balances, along with securing financial support from various multilateral and bilateral partners.

To fulfill IMF requirements, Pakistan implemented stringent measures, including a revised budget, a notable interest rate hike, and substantial increases in electricity and gas prices, to ensure the success of the bailout. As part of the agreement, Pakistan also raised $1.34 billion through new taxation to meet fiscal adjustments. However, these measures resulted in a record-high inflation rate of 38% year-on-year in May, which continues to hover above 30%.