IMF’s executive board has completed the first review of Stand-by Arrangement (SBA) for Pakistan, approving the 2nd tranche of the program. To recall, Pakistan entered into IMF’s 9-month Stand-by Arrangement in Jul’23 of ~USD 3.0bn (SDR 2,250mn).

• With this approval, disbursement of ~USD 700mn (SDR 528mn) will be immediately, bringing the cumulative disbursement amount to ~USD 1.9bn (SDR 1.4bn).
• The remaining funds of ~USD 1.1bn (SDR 828mn) will be provided after the completion of the next review (Mar’24).
• This financial support aims to assist the Pakistani authorities in implementing their economic stabilisation program.

The program prioritises four key areas of focus:

     Implementation of the FY24 budget, facilitating necessary fiscal adjustments, debt sustainability, and protection of critical social spending.

o     Restoration of a market-determined exchange rate and establishing well-functioning foreign exchange markets to absorb external shocks and eliminate foreign exchange shortages.

o     Adoption of an appropriately tight monetary policy aimed at disinflation.

o     Continued progress on structural reforms, particularly in enhancing the viability of the energy sector, improving governance of state-owned enterprises (SOEs), and promoting climate resilience.

 Courtesy- AHL Research