Islamabad, January 17, 2024: In the face of a crisis, Pakistan has received USD 700 million from the International Monetary Fund (IMF) as part of its bailout program, according to a statement by State Bank of Pakistan (SBP) Governor Jameel Ahmed on Wednesday.
The loan approval followed the completion of the IMF Executive Board’s first review last week, bringing the total disbursements under the USD 3 billion Standby Arrangement (SBA) to around USD 1.9 billion.
Antoinette Sayeh, Deputy Managing Director and Chair, stated, “There are now tentative signs of activity picking up and external pressures easing,” following the board’s approval.
The nine-month SBA, approved in July last year, aims to provide a policy anchor for addressing domestic and external balances and a framework for financial support from multilateral and bilateral partners.
To secure the bailout, Pakistan implemented tough IMF-requested measures, including a revamped budget, a record interest rate hike, and increases in electricity and gas prices.
Under the bailout deal, Pakistan also raised USD 1.34 billion in new taxation to meet fiscal adjustments. These measures led to an all-time high inflation of 38% year-on-year in May, which is still above 30%.
Sayeh emphasized the importance of continued adjustments in the power sector and cost-side reforms for fiscal sustainability.
With the IMF loan secured, analysts anticipate Pakistan to secure more multilateral and bilateral loans. The SBP also confirmed that the UAE has rolled over two USD 1 billion deposits, providing relief to the friendly country.
The IMF’s approval follows a staff-level agreement reached in November 2023, reflecting Pakistan’s commitment to implementing key reforms. The current IMF program of USD 3 billion is set to end in April 2024, with around USD 8 billion remaining undisbursed.
Pakistan’s Finance Ministry officials expressed optimism about achieving the required results, stating that the country strictly implemented the economic reforms advised by the IMF.
As of November 2023, Pakistan’s total debt burden surged to PKR 63.390 trillion, with PKR 40.956 trillion in domestic loans and PKR 22.434 trillion in international loans. The overall debt increased by over PKR 12.430 trillion during the tenure of the PDM and the caretaker government.
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