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The State Bank of Pakistan (SBP) on Wednesday announced it had received a $1.16 billion deposit from the International Monetary Fund (IMF) after the global lender’s Executive Board approved the revival of Islamabad’s suspended bailout program two days earlier.
“Today, SBP has received proceeds of $1.16 billion (equivalent to SDR894 million) after the IMF Executive Board completed the combined seventh and eighth reviews under the Extended Fund Facility (EFF) for Pakistan,” read a brief statement issued by the central bank. “This will help improved SBP’s foreign exchange reserves and will also facilitate realization of other planned inflows from multilateral and bilateral sources,” it added.
The IMF, on Monday, approved the seventh and eighth reviews of a suspended $6 billion EFF for Pakistan, with Finance Minister Miftah Ismail hailing the development in a posting on Twitter. In a statement issued by the global lender, it said the release of the latest tranche had raised to $3.9 billion the total funds disbursed to Pakistan under the $6 billion deal signed with the ousted Pakistan Tehreek-e-Insaf (PTI)-led government.
The original deal, inked in July 2019, was for the IMF to provide the $6 billion over 39 months. However it was beset by delays caused by the COVID-19 pandemic and the suspension of Pakistan’s program due to deviations from the agreement inked with the IMF. The IMF has now extended the original agreement until the end of June 2023 and increased the total loan payout to $6.5 billion.
“Pakistan is at a challenging economic juncture,” read the IMF statement. “A difficult external environment combined with procyclical domestic policies fueled domestic demand to unsustainable levels,” it said, adding the economic overheating provoked by these steps had led to large fiscal and external deficits in the last fiscal year, boosting inflation, and eroding reserve buffers.