IMF Board Set To Deliberate On Vital $700 Million Tranche For Pakistan's Economic Recovery: Report

Bhuvan Krishna

Jan 02, 2024, 04:46 PM | Updated 04:46 PM IST

Representative Image
Representative Image

The International Monetary Fund (IMF) has scheduled Pakistan for discussion on its Executive Board agenda on 11 January, according to a report from Dawn.

During an upcoming meeting, the board is poised to discuss and potentially grant final approval for the release of the next $700 million tranche under the existing $3 billion stand-by arrangement (SBA).

The ongoing IMF program, totalling $3 billion, is expected to conclude in the second week of April, with approximately $1.8 billion still undisbursed. The initial tranche of $1.2 billion was disbursed in July.

In November 2023, a staff-level agreement was reached between the IMF staff and Pakistani authorities regarding the first review under Pakistan's SBA. The approval of this agreement by the IMF's executive board was anticipated in December but has now been scheduled for 11 January.

This development holds significance for Pakistan's economic landscape, as the disbursement of the next tranche could offer crucial financial support. The outcome of the upcoming meeting will shape the trajectory of the ongoing economic cooperation between Pakistan and the IMF.

The IMF stated, "Discussions between the IMF staff and the authorities on policies to strengthen macroeconomic stability in the coming year continue, and important progress has been made over the FY23 budget."

The IMF has also updated economic projections and data for Pakistan, reflecting a challenging outlook for the country in 2024.

The projected real GDP for the year is expected to contract by 0.5 per cent, indicating potential economic challenges. Simultaneously, the projection for the Consumer Price Index in 2024 shows a significant increase, pointing to a substantial rise in inflation and posing additional challenges for the country's economic stability.

Despite a surprising increase of $853 million in the reserves of the State Bank for the week ending 22 December 2023, Pakistan is keen to receive the second tranche, signalling adherence to the IMF's demands for economic recovery.

Caretaker Finance Minister Shamshad Akhtar has indicated the need for a new agreement with the IMF to support the economy.

Despite tough conditions, Pakistan, facing high inflation at 29.7 per cent for December, is likely to continue its historical reliance on IMF support, with 24 arrangements since becoming a member in 1950.

Bhuvan Krishna is Staff Writer at Swarajya.

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