SBP Secures $1 Billion IMF Tranche Amid New Financing Assurances

30 Sep, 2024

SBP Secures $1 Billion IMF Tranche Amid New Financing Assurances

The State Bank of Pakistan (SBP) announced it has received a $1 billion tranche from the International Monetary Fund (IMF) as part of a new programme. This comes alongside additional financing assurances from China, Saudi Arabia, and the United Arab Emirates, which go beyond a previously arranged rollover of $12 billion in bilateral loans. The approval of the 37-month, $7 billion Extended Fund Facility by the IMF Board has facilitated this initial disbursement.

The SBP stated that this inflow, equating to approximately 760 million Special Drawing Rights (SDRs), will be reflected in its liquid reserves by October 3. SDRs, an international reserve asset created by the IMF, are allocated to member states to help bolster their official reserves. Nathan Porter, the IMF’s Pakistan Mission Chief, noted that while he could not disclose the specific amounts of additional financing from the three nations, these assurances are significant for Pakistan’s economic recovery.

Porter praised Pakistan’s remarkable economic turnaround since mid-2023, highlighted by a dramatic decrease in inflation, stabilized exchange rates, and a doubling of foreign reserves. The country has achieved its first primary budget surplus in two decades, with a goal to increase it to 2% of GDP. The next review of the loan is anticipated in March or April of 2025, based on performance criteria set for the end of 2024.