IMF Approves USD three bln. bailout program for Pakistan

WASHINGTON, July 12 (KUNA) -- The Executive Board of the International Monetary Fund (IMF) approved on Wednesday a nine-month Stand-By Arrangement (SBA) for Pakistan to the amount of SDR 2,250 million (about USD three billion, or 111 percent of quota) to support the authorities' economic stabilization program.

The arrangement comes at a challenging economic juncture for Pakistan, according to a statement from the IMF. 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. The program will focus on (1) implementation of the FY24 budget to facilitate Pakistan's needed fiscal adjustment and ensure debt sustainability, while protecting critical social spending; (2) a return to a market-determined exchange rate and proper FX market functioning to absorb external shocks and eliminate FX shortages; (3) an appropriately tight monetary policy aimed at disinflation; and (4) further progress on structural reforms, particularly with regard to energy sector viability, SOE governance, and climate resilience.
The Executive Board's approval allows for an immediate disbursement of SDR894 million (or about USD 1.2 billion). The remaining amount will be phased over the program's duration, subject to two quarterly reviews, the statement added. (end) asj.gb.