The International Monetary Fund’s (IMF) executive board on Wednesday approved the new $3-billion Stand-By Arrangement (SBA) for Pakistan, which immediately allows the disbursement of about $1.2 billion.
“The Executive Board of the International Monetary Fund approved a 9-month Stand-By Arrangement (SBA) for Pakistan for an amount of SDR2,250 million (about $3 billion, or 111 per cent of quota) to support the authorities economic stabilization program,” the global lender said in a statement.
It added the arrangement comes at a challenging economic juncture for Pakistan. A difficult external environment, devastating floods and policy missteps have led to large fiscal and external deficits, rising inflation and eroded reserve buffers in FY23.
The board’s approval was needed before disbursing the first tranche of money, with the rest to arrive later in installments.
IMF’s approval comes after Saudi Arabia and the United Arab Emirates (UAE) deposited $2 billion and $1 billion, respectively, in the State Bank of Pakistan, boosting the foreign exchange reserves.
Last month, the IMF reached a staff-level pact with Pakistan on a $3 billion Standby Arrangement, a decision long awaited by the country, which is teetering on the brink of default.
The $3bn funding, spread over nine months, is higher than expected for Pakistan. The country was awaiting the release of the remaining $2.5bn from a $6.5bn bailout package agreed in 2019, which expired in June.
Earlier, Pakistan also submitted a letter of intent to the IMF, assuring the lender that no new tax amnesty would be introduced in the next nine months.
