IMF greenlights $700 million loan tranche for Pakistan

IMF loan to Pakistan: The International Monetary Fund (IMF) has given the nod for a $700 million loan tranche to alleviate financial strain in Pakistan. This approval comes within the framework of an existing $3 billion bailout package, following the successful completion of the initial review of the nation's economic reform programme.

The Ministry of Finance officially announced the favorable outcome of the review conducted by the Executive Board of the IMF, as reported by the Dawn newspaper.

A mission from the Washington-based global lender meticulously assessed Pakistan's economic performance for the first three months of the fiscal year, spanning from July to September 2023.

The completion of this review triggers an immediate disbursement of $700 million in Special Drawing Rights (SDR), thereby bringing the total disbursements under the Stand-By Arrangement (SBA) to $1.9 billion, according to an official statement from the ministry.

The initial tranche of $1.2 billion, part of the current $3 billion IMF programme, was released in July 2023. The remaining two tranches are contingent on reviews, with the first successfully concluded and the second scheduled for December, as reported by The News International.

In November 2023, an SBA agreement was reached between IMF staff and Pakistani authorities following the first review under Pakistan’s SBA.

In a significant move, the global lender had inked a nine-month $3 billion financing arrangement with Pakistan in June 2023 to extend a short-term lifeline to the debt-stricken nation.

Pakistan's economy has faced a persistent downward trajectory in recent years, exerting immense pressure on the impoverished masses due to rampant inflation. This economic downturn has made it increasingly challenging for a substantial portion of the population to meet their basic needs.

The country had grappled with the daunting task of securing sufficient foreign exchange to meet IMF requirements. The IMF had withheld the remaining $2.5 billion from a $6.5 billion loan programme inked in 2019, which expired on June 30 last year.

(With PTI inputs.)