Islamabad: The International Monetary Fund (IMF) staff and Pakistani authorities have successfully reached a staff-level agreement on the first review under Pakistan’s Stand-By Arrangement (SBA), as per news sources on November 15. This achievement, subject to approval by the IMF’s Executive Board, marks a crucial step forward for the nation’s economic stability and growth prospects, and prioritization of an overhaul in the energy sector.
Upon approval by the IMF’s Executive Board, Pakistan is poised to gain access to an impressive Special Drawing Rights (SDR) worth 528 million (equivalent to approximately USD 700 million), as announced in a statement by the IMF on Wednesday.
Nathan Porter, who led the IMF team during discussions in Islamabad from November 2 to 15, highlighted the significance of this agreement in supporting Pakistan’s stabilization program. He stated that around USD 700 million (SDR 528 million) will become available to Pakistan upon approval from the board, bringing total disbursements under the program to almost USD 1.9 billion.
The stabilization policies under the SBA have already set the stage for a budding economic recovery in Pakistan. International support and improved confidence, coupled with the steadfast execution of the FY24 budget and adjustments in energy prices, have played key roles in easing fiscal and external pressures. While inflation is expected to decline in the coming months, Porter cautioned that external risks, including geopolitical tensions and changes in commodity prices, still pose challenges. Efforts to enhance resilience against these risks must persist.
Key priorities under the SBA include fiscal consolidation to reduce public debt, the expansion of social safety nets, energy sector reforms, market-driven exchange rates, and building financial sector resilience. The IMF team commended Pakistan’s commitment to these reforms and expressed gratitude to the Pakistani authorities, the private sector, and development partners for their cooperation during this mission.
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