The International Monetary Fund (IMF) has granted Pakistan a much-needed financial lifeline with the approval of a 9-month Stand-By Arrangement (SBA) worth approximately $3 billion.

The International Monetary Fund’s (IMF) Executive Board has given the green light for a $1.1 billion loan tranche for Pakistan, marking the last disbursement under the $3 billion Stand-by Arrangement (SBA). The IMF’s decision follows the completion of the second and final review of Pakistan’s economic reform program supported by the SBA; this represents a noteworthy milestone in Pakistan’s efforts to restore economic stability.

$1.1 Billion Loan Tranche for Pakistan and Future Plans

Pakistan’s policy efforts under the SBA have led to moderate growth, eased external pressures, and a gradual decline in inflation. Looking ahead, the nation aims to capitalize on this stability by implementing sound macroeconomic policies and structural reforms to breed stronger, inclusive, and sustainable growth. The IMF emphasizes the importance of continued external support and vigilance over the financial sector to ensure stability. Pakistan’s central bank’s tight monetary policy stance remains appropriate until inflation reaches more moderate levels, and further improvements in the functioning of the foreign exchange market are essential.

Prime Minister’s Discussion with IMF

The approval of the loan tranche comes shortly after Prime Minister Shehbaz Sharif’s meeting with IMF Managing Director Kristalina Georgieva, where discussions centered on Pakistan’s entry into another IMF program. Pakistan is actively seeking a new long-term Extended Fund Facility (EFF) after the expiration of the current SBA, the size and time frame of the new program will be determined after consensus is reached on its major contours in May 2024.

Pakistan faces substantial economic challenges, including a chronic balance of payments crisis. However, the Ministry of Finance projects a modest growth of 2.6% for the fiscal year, with efforts focused on achieving macroeconomic stability and implementing necessary structural reforms. As the nation moves forward, continued collaboration with international partners and a commitment to reform will be crucial for sustained economic growth and stability.

Read more: PM Shehbaz Talks Bailout with IMF Chief at WEF Sidelines


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