- IMF approved 9-month SBA for an amount of SDR2,250 million.
- Executive Board approval allows immediate disbursement of $1.2 billion.
- Balance amount to be disbursed in a phased manner over the duration of the programme: IMF
The International Monetary Fund (IMF) on Wednesday approved a 9-month Stand-by Arrangement (SBA) of about $3 billion for Pakistan after reaching a staff-level agreement with the country.
“Today, the Executive Board of the International Monetary Fund (IMF) approved a 9-month Stand-by Arrangement (SBA) for an amount of SDR 2,250 million (about $3 billion or 111 percent of the quota) to support Pakistan. Gave. economic stabilization program of the authorities,” the global lender said in a statement.
The development comes hours after Finance Minister Ishaq Dar said that the United Arab Emirates (UAE) will help Pakistan secure the International Monetary Fund’s (IMF) bailout package as part of its financial commitment. 1 billion dollars have been received from
“We have received $1 billion from the UAE. The UAE has deposited the amount into a State Bank account,” the financial monarch announced in a televised media address on Wednesday.
A day earlier, the finance minister said Saudi Arabia has deposited $2 billion in the SBP account to help boost the country’s foreign reserves and meet the global lender’s condition to bridge the external financing gap.
Islamabad signed a short-term IMF agreement on 30 June, under which the country would receive $3 billion over nine months, subject to approval by the IMF’s board.
The IMF said in a statement today that the Executive Board’s approval allows for the immediate disbursement of SDR894 million (or about US$1.2 billion).
It added that the remaining amount would be given in a phased manner over the duration of the program, subject to two quarterly reviews.
The IMF said that the SBA was signed at a “challenging economic juncture for Pakistan”.
It added, “Difficult external environment, devastating floods and policy missteps led to large fiscal and external deficits, rising inflation and dwindling reserve buffers in FY2013.”
The IMF said Pakistan’s new SBA-supported program would provide a policy basis to address domestic and external imbalances and a framework for financial assistance from multilateral and bilateral partners.
After months of delay, Pakistan secured the bailout package after taking drastic economic measures, including raising interest rates and increasing taxes, to meet IMF conditions.
Following an IMF staff-level agreement, credit rating agency Fitch on Monday – after nearly a year – upgraded Pakistan’s long-term foreign currency issuer default rating from CCC to CCC.
According to Moody’s Investors Service, Pakistan has a debt repayment of $25 billion in the fiscal year beginning July. This is more than five times its foreign exchange reserves, which stood at $4.5 billion at the end of June.
The IMF deal will receive billions of dollars from countries and other multilateral lenders.
In the plan sent to the lender, sources in the finance division said Pakistan arranged bilateral funding of $3.5 billion from China, $2 billion from Saudi Arabia and $1 from the United Arab Emirates.
On the multilateral side, Pakistan aims to secure $500 million from the Asian Development Bank, $500 million from the World Bank and $3 billion from the IMF.
Fitch said local authorities expect $25 billion in gross new external financing in fiscal 2014, while $15 billion in public debt maturities, including $1 billion in bonds and $3.6 billion to multilateral creditors.
To ensure that the programme’s measures are implemented ahead of the elections due in October, the lender’s team has reached out to all mainstream political parties, including the Imran Khan-led Pakistan Tehreek-e-Insaf (PTI), to seek support and consensus. Political parties met. For SBA.