Pakistan receives first tranche of IMF loan

KARACHI: Pakistan has received the first tranche of the International Monetary Fund’s (IMF) following the approval of the IMF Executive Board of a 37-month Extended Fund Facility amounting to US$7 billion.

State Bank of Pakistan (SBP) received SDR 760 million –equivalent to USD 1026.9 million– as the first tranche from the IMF on Friday, according to SBP. These inflows will be reflected in SBP liquid reserves to be released on Thursday, October 03, 2024.

The International Monetary Fund (IMF) Executive Board on September 25 approved Pakistan’s 37-month Extended Fund Facility (EFF) arrangement of about US$7 billion, ARY News reported citing sources.

The IMF Executive Board in its meeting considered Pakistan’s request for an Extended Arrangement under the Extended Fund Facility. Pakistan would receive an initial instalment of US$1.1 billion by September 30, with the loan carrying an interest rate below 5 per cent.

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The 37-month Extended Fund Facility arrangement aims to support Pakistan’s economic stability and growth, with key policy goals including sustainable public finances, reduced inflation, and strengthened external buffers.

Earlier on September 13, Finance Minister Muhammad Aurangzeb announced that all matters with the IMF have been settled amicably, stating, “Alhamdulillah, the Prime Minister is grateful to the IMF negotiation team and related institutions.”

He highlighted that the economy is now transitioning towards growth following stabilization.

According to the minister, finalisation of the agreement will occur during the IMF board meeting later this month.

He added that a reduction in the policy rate will boost investment and business activities, creating employment opportunities.

Meanwhile, Prime Minister (PM) Shehbaz Sharif expressed satisfaction over the approval of the IMF package of US$7 billion for Pakistan.

In a statement issued by the PM Office, the prime minister said that the process for economic reforms is underway and after attaining financial stability, efforts would continue to achieve the goals of economic growth and development.