IMF Approves $700 Million Tranche for Pakistan’s Economic Stabilization

Pakistan

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Second Tranche Released as Part of $3 Billion Financing Package to Support Pakistan

The International Monetary Fund (IMF) Executive Board has approved the first review of a $3 billion short-term financing package for Pakistan, leading to the release of a second tranche of $700 million for the South Asian country. This decision comes as part of a 9-month Stand-By Arrangement (SBA) aimed at supporting Pakistan’s economic stabilization program.

Last year in July, the IMF board approved the much-needed SBA for Pakistan, providing the country with a lifeline for its economic challenges. Islamabad received the first tranche of $1.2 billion along with the endorsement for the loan program the same month.

A staff-level agreement (SLA) was reached between a visiting IMF delegation and Pakistani authorities in November, paving the way for the first review under the SBA. The recent approval by the IMF’s Executive Board marks a significant milestone in Pakistan’s economic recovery efforts.

With the release of the second tranche, the total disbursements under the SBA for Pakistan have now reached $1.9 billion, providing crucial financial support for the country’s economic stability.

Pakistan has implemented several economic measures, including increases in energy prices and tax burden, to address its economic challenges. These measures, while necessary, have contributed to spiraling inflation, which reached 38 percent in May last year. As the country prepares for national elections on February 8, experts emphasize the importance of a clear economic roadmap to sustain progress and secure future IMF support.

Dr. Sajid Amin, Deputy Executive Director at the Sustainable Development Policy Institute (SDPI), highlighted the significance of the next review of the program in laying the foundation for Pakistan’s future economic policies. A well-thought-out economic strategy by the next elected government will be crucial for securing additional IMF support and ensuring economic stability.

As Pakistan navigates its economic landscape, characterized by trade and current account deficits, inflation, and low foreign exchange reserves, the nation remains committed to implementing reforms and measures to strengthen its economy.

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