After extensive discussions in Washington, Pakistan’s request for the release of funds has been approved by the IMF Executive Board. This move brings to a close the second bailout package between Pakistan and the IMF. The approval signals the release of a USD 1.1 billion loan tranche, marking the third and final installment of the USD 3 billion standby arrangement. This support is crucial for Pakistan’s efforts to avert a sovereign default, especially as the current arrangement is set to expire this month.
Last month, Pakistan and the IMF reached a staff-level agreement on the final review of the USD 3 billion bailout package. To date, Pakistan has received two tranches totaling USD 1.9 billion, with USD 1.2 billion disbursed in July 2023 and an additional USD 700 million in January 2024.
Looking ahead, Pakistan is actively pursuing a new, more substantial IMF loan over a longer duration. Finance Minister Muhammad Aurangzeb has indicated that Islamabad could secure a staff-level agreement on the new program by July. The focus is on securing a loan spanning at least three years to strengthen macroeconomic stability and implement necessary structural reforms. However, the exact scale of the program remains undisclosed.
This positive development comes on the heels of Pakistan Prime Minister Shehbaz Sharif’s meeting with IMF Managing Director Kristalina Georgieva, where he emphasized his government’s firm commitment to revitalizing Pakistan’s economy. At the meeting, held on the sidelines of the World Economic Forum Special Meeting, the Prime Minister underlined his administration’s dedication to implementing structural reforms, maintaining fiscal discipline, and adopting prudent policies for sustainable economic growth.
Prime Minister Sharif also expressed his gratitude to Ms. Georgieva for the IMF’s support in securing the USD 3 billion Standby Arrangement last year.
