IMF Approves Final Tranche for Pakistan
The International Monetary Fund (IMF) Executive Board’s decision on Monday came after the global lender completed the second and final review of Pakistan’s economic reform programme supported by the IMF’s Stand-By Arrangement (SBA). The IMF has approved an immediate disbursal of the final tranche of $1.1 billion to Pakistan as part of a bailout package, emphasising that the cash-strapped country needs to take tough measures to bring its economy back on track.
Key Points:
- Disbursements under the SBA reached around $3 billion.
- All board members favoured the release of the last installment.
- India abstained from voting.
IMF’s Deputy Managing Director Antoinette Sayeh highlighted the importance of capitalizing on stability and implementing sound macroeconomic policies and structural reforms for sustainable growth. Continued external support and reforms in state-owned enterprises were emphasized.
Future Plans and Challenges:
Sayeh stressed the need for market-determined exchange rates, broadening structural reforms, addressing undercapitalized financial institutions, and ensuring financial stability. Prime Minister Shehbaz Sharif’s meeting with IMF Managing Director Kristalina Georgieva discussed the potential for a new IMF programme to support the economy.
An IMF team is expected to visit Pakistan in May to discuss a new long-term Extended Fund Facility (EFF) ranging between $6 to $8 billion. Former Prime Minister Shahid Khaqan Abbasi expressed concerns over negative economic indicators and the impact of IMF agreements on growth and inflation.
The $350 billion economy faces a balance of payments crisis with significant debt repayment obligations in the upcoming fiscal year.
