ISLAMABAD: The International Monetary Fund (IMF) has approved the first review of the bailout package for Pakistan. IMF Executive Board agreed to release a loan tranche of $700 million amid the maturity of a $2 billion loan by the United Arab Emirates (UAE). After the approval of $700 million, the total disbursements made under the IMF Standby Arrangement reached to $1.9 billion.
The board meeting took place after two months of finalising the IMF staff-level agreement. In July 2023, Pakistan and IMF reached a nine-month programme for a $3 billion lending as a bridge financing. The $700 million tranche, approved by IMF Executive Board, has surged the gross official foreign exchange reserves of Pakistan to $8.8 billion.
Pakistan has received financial assistance from the Asian Infrastructure Investment Bank (AIIB), Asian Development Bank (ADB), IMF, and World Bank to boost its foreign reserves.
Support from Bilateral Creditors
According to the finance ministry, the $2 billion loan from UAE would mature by the final week of January 2024. He explained the breakout that $1 billion would mature in mid-January while the remaining $1 billion by January 23 2024. UAE also helped Pakistan to raise the foreign exchange reserves in July 2023 when it placed $3 billion with the State Bank of Pakistan (SBP).
Other than the UAE, Saudi Arabia deposited $5 billion and China granted $4 billion in deposits. The finance ministry said that $2 billion of China’s loan would mature in March.
UAE, China and Saudi Arabia have continued the journey of being the bilateral creditors on the condition of continuous engagement with the IMF.
Meanwhile, IMF has cut down the economic growth projection of Pakistan to 2 pc from the estimated 2.5 pc value in July 2023. IMF has projected an inflation rate of 24 pc (down from 26 pc) which has provided a space to lower down the interest rates.