Updated January 2nd, 2024 at 12:25 IST
Pakistan eyes USD 700mn bailout package from IMF amid high inflation, economic turmoil
IMF updated the economic projections and data for Pakistan, warning that the country faces challenging outlook for the new year 2024.
Cash strapped Pakistan is slated to get financial aid worth USD 700 million as the next tranche of the bailout from the the International Monetary Fund (IMF), according to the Islamabad based reports. Executive Board of the global lender is set to meet on January 11 to address the deepening financial crisis that has resulted in economic turmoil within the South Asian nation.
IMF updated the economic projections and data for Pakistan, warning that the country faces challenging outlook for the new year 2024 as its GDP is anticipated to face contraction of 0.5 percent, indicating economic hindwinds. The Consumer Price Index in 2024 projections show a substantial steep in the inflation that will pose difficulties in economic stability.
IMF’s approval is based on Pakistan’s fulfilment of its demands of economy recovery. There was a signifiant USD 853 million jump in the reserves of the State Bank in the week concluding December 22, 2023. Pakistan’s Ministry of Finance announced that July-December revenue collection target of Rs 4.425 trillion that was given by the IMF surpassed by Rs 43 billion.
Pakistan Finance Minister Shamshad Akhtar in November had voiced the urgency of another bailout package from international multilateral lender. “We need to continue with the IMF as our economy is still fragile and we will possibly seek another loan,” Akhtar had noted at a press conference shortly after a staff-level agreement for a $700 million payout in November.
Pakistan’s Caretaker Finance Minister Shamshad Akhtar, however, was quoted as saying by Islamabad reports that the country is eyeing a new agreement with the IMF to revive the battered economy. Pakistan is faring through high inflation at 29.7 per cent for December, a steep from 29.2 per cent in the month before. The country has had a total 24 arrangements with the IMF since it became a member on July 11, 1950. It has faced balance-of-payments-related challenges, driven by a burgeoning trade deficit.
IMF to deliberate on granting USD 700 million tranche in Jan
In January, the board of the Washington-based International Monetary Fund will deliberate on granting the final approval for the disbursement of the next USD 700 million tranche. If passed, the funds will be part of the existing USD 3 billion Stand-By Arrangement (SBA). The upcoming meetings of IMF Executive Board calendar are scheduled for January 8, 10 and 11, Islamabad’s newspaper The Dawn reported. Meanwhile the discussions on the second tranche under the existing aid amounting to USD 3 billion are expected to conclude in the second week of April amounting to approximately USD 1.8 billion. IMF released USD 1.2 billion, the first tranche of aid, in July.
IMF board's approval was pending in December but was later scheduled for January 11. “Discussions between the IMF staff and the authorities on policies to strengthen macroeconomic stability in the coming year continue, and important progress has been made over the FY23 budget,” the IMF said in a published statement.
(With agencies inputs)
Published January 2nd, 2024 at 12:25 IST
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