Pakistan receives $1.1bn from IMF

ISLAMABAD: Prime Minister Shehbaz Sharif Tuesday expressed satisfaction over the disbursement of $1.1 billion final tranche by the IMF, expressing the hope that it would help bring economic stability to the country.

On Monday, the IMF Executive Board completed the second review under the Stand-By Arrangement (SBA) for Pakistan, allowing for an immediate disbursement of around $1.1 billion, bringing total disbursements under the arrangement to around $3 billion. The IMF and Pakistan had reached the Staff Level Agreement on the second and final review on March 20, 2024 for the remaining $1.1 billion.

The prime minister, in a statement, said in 2016, Pakistan Muslim League-Nawaz Quaid Nawaz Sharif had completed the IMF program, and the current one was the second SBA nearing completion. Highlighting the significance of IMF program to save Pakistan from economic default, Shehbaz said bitter and tough decisions were coming to fruition in the form of economic stability. “We will make all possible efforts to bring in economic stability. The real success is not to get loans but to get rid of them,” he remarked.

He said the time to rid the country of loans and bring in economic prosperity would arrive soon if efforts in the right direction continued with the same passion. The prime minister appreciated Finance Minister Muhammad Aurangzeb and his team and thanked the IMF managing director for supporting Pakistan in difficult times.

Meanwhile, Prime Minister Shehbaz Sharif Tuesday said bilateral relations as well as the economic partnership between Pakistan and Saudi Arabia were getting stronger. Concluding his visit to the Kingdom, Shehbaz said a delegation of Saudi businessmen was about to visit Pakistan in the coming days. With the Pak-Saudi economic partnership, a new era of bilateral ties had begun, he remarked.

He thanked Saudi Crown Prince Mohammed Bin Salman for warm hospitality during the visit, and also for his directives to his ministers regarding Pakistan. He also expressed gratitude to the Saudi ministers for their efforts and full preparations to help reach understanding between the leaderships of two countries.

Senior Saudi government officials, Saudi ambassador in Islamabad, Pakistan’s ambassador in the Kingdom and other diplomatic personnel saw off the prime minister at the Royal Airport of Riyadh.

Meanwhile, the State Bank of Pakistan (SBP) has received $1.1 billion from the International Monetary Fund (IMF) as the final tranche of a $3 billion loan programme, it said on Tuesday. This will help the country achieve economic stability and bolster its foreign exchange reserves.

“SBP has received SDR 828 million (around US$ 1.1 billion) in value [on] 29 April 2024 in its account from IMF. The amount shall be reflected in SBP’s foreign exchange reserves for the week ending on 3rd May 2024,” it said in a statement.

The central bank’s governor, Jameel Ahmad, informed analysts after the monetary policy meeting on Monday that the forex reserves are currently in a comfortable position. The gradual allowances for profit are easing the pressure on reserves and outstanding payments. The SBP has paid off its commercial loans and now its debt profile consists of bilateral and multilateral loans, which has resulted in an improvement in the maturity profile of the debt, Ahmad said.

Despite weak financial inflows, the reduction in the current account deficit has enabled the central bank to make significant debt repayments, including the repayment of a $1 billion Eurobond. This has allowed the SBP to maintain its foreign reserves around $8.0 billion as of April 19, the SBP said in a monetary policy statement. Analysts believe the central bank is maintaining its reserves by purchasing dollars from the market.

With the latest disbursement from the IMF, reserves will reach $9 billion. The SBP is optimistic that it can maintain this reserve level by June 2024, despite upcoming external payments of $1.8 billion.

During the fiscal year 2024, the external debt that needed to be serviced was $24.3 billion. Out of this amount, $3.9 billion was allocated for interest payments, while the remaining $20.4 billion was for principal repayments. The majority of this debt has already been settled, and only $1.8 billion in principal remains to be paid in the remaining months of FY24, according to the SBP.