Pakistan successfully secures final IMF approval for $3 billion bailout

The International Monetary Fund (IMF) has officially granted approval to Pakistan for a 9-month Stand-By Arrangement (SBA) amounting to approximately $3 billion. This decision comes shortly after reaching a staff-level agreement with the country.

In a statement, the IMF announced, “Today, the Executive Board of the International Monetary Fund (IMF) approved a 9-month Stand-By Arrangement (SBA) for Pakistan for an amount of SDR2,250 million (about $3 billion, or 111 percent of quota) to support the authorities’ economic stabilization program.”

Earlier on the same day, Finance Minister Ishaq Dar confirmed that Pakistan had received $1 billion from the United Arab Emirates (UAE) as part of their financial commitment to assist Pakistan in securing the IMF bailout package. During a televised media address, the finance minister stated, “The UAE has deposited the amount into the State Bank account.”

Additionally, Saudi Arabia had previously deposited $2 billion in the State Bank of Pakistan (SBP) account, fulfilling the IMF’s condition to bridge the external financing gap and bolster the country’s foreign reserves. This contribution aims to support the economic stability of Pakistan.

Pakistan had signed a short-term IMF deal on June 30, under which the country was set to receive $3 billion over nine months, pending approval from the IMF’s board. With the Executive Board’s approval, an immediate disbursement of SDR894 million (approximately $1.2 billion) is authorised, as stated by the IMF.

The remaining funds will be disbursed in phases throughout the duration of the programme, subject to two quarterly reviews, according to the IMF’s statement. The IMF acknowledges that Pakistan is currently facing a challenging economic situation due to external difficulties, devastating floods, and policy missteps, resulting in significant fiscal and external deficits, rising inflation, and depleted reserve buffers in the fiscal year 2023.

The IMF sees the new SBA-supported programme as a means to address both domestic and external imbalances and provide a framework for financial support from multilateral and bilateral partners. Pakistan’s successful acquisition of the IMF bailout package was contingent upon implementing difficult economic measures, such as interest rate hikes and tax increases, to fulfill the IMF’s conditions.