IMF approves $3bn SBA for Pakistan

July 12, 2023 (MLN): The International Monetary Fund (IMF) executive board has approved the 9-month Stand-By-Agreement (SBA) for Pakistan for an amount of $3 billion, with an immediate disbursement of $1.2bn to support the authorities’ economic stabilization program.

As per the latest press issued, the IMF board has decided that the remaining amount will be phased over the program's duration, subject to two quarterly reviews.

The aforementioned development comes after the long-standing Staff Level Agreement (SLA) worth $3bn was signed between the IMF and Pakistan on June 29, 2023.

Pakistan’s’ economic reform program aims to support immediate efforts to stabilize the economy and guard against shocks while creating the space for social and development spending to help the people of Pakistan.

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.

Pakistan’s new SBA-supported program will provide a policy anchor for addressing domestic and external imbalances and a framework for financial support from multilateral and bilateral partners.

“A better-than-expected loan by IMF which will provide the much-needed stability to Pakistan at a time when Pakistan will see a transfer of power from one government to caretakers and then to a New government,” Mohammad Sohail CEO Topline Securities Limited stated.

“Besides that, this will further help in getting bi-lateral and multi-lateral loans thereby supporting the falling FX reserves and stabilizing the currency and inflationary pressure,” he further added.

It is worth noting that in the past two days, the State Bank of Pakistan (SBP) has received a $2bn deposit from Saudi Arabia and a $1bn deposit from United Arab Emirates (UAE).

To note, as of June 30, 2023, the country's total reserves stood at $9.75bn.

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