IMF loan helps Pakistan unlock another $5.6 billion in funding

ISLAMABAD: Pakistan is set to draw in $5.6 billion in additional financing after securing a loan from the International Monetary Fund (IMF), a move seen as helping the South Asian nation avoid a default and boosting its foreign-exchange reserves.

The new funding includes $3.7 billion of commitments from bilateral partners including Saudi Arabia and the United Arab Emirates (UAE), Nathan Porter – the IMF’s mission chief for Pakistan – said in an emailed response to Bloomberg News.

On Wednesday, State Bank of Pakistan (SBP) received $1.2 billion from the International Monetary Fund (IMF) as the first tranche of a $3 billion bailout to stabilise the economy.

Finance Minister Ishaq Dar – in a televised statement – said the remaining $1.8 would be released after two reviews, meaning that there would be two instalments.

Pakistan’s foreign reserves had jumped by $4.2 billion during the last four days, he said – in a reference to $2bn deposit made by Saudi Arabia and another $1bn received from the United Arab Emirates (UAE).

The foreign exchange reserves held by the SBP rose to $8.4 billion. Dar said: “Our foreign exchange reserves will close at around $13-$14 billion on July 14”.

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Pakistan is back on the track of development and prosperity, he added.

Noting that Prime Minister Shehbaz Sharif played a pivotal role in reaching the deal with the IMF, Ishaq Dar said the economic team had extended full support to him during the complicated process.

The IMF executive board approved the bailout loan program of $3 billion this week after months of delay, boosting Pakistan’s financial stability ahead of elections this year. Fitch Ratings upgraded Pakistan this week on the improving funding environment.