In a noteworthy development for Pakistan’s economic challenges, the International Monetary Fund (IMF) IMF releases $700m loan as part of the previously agreed-upon bailout program, confirmed by State Bank of Pakistan (SBP) Governor Jameel Ahmed on Wednesday.
The loan approval followed the IMF Executive Board’s completion of its first review last week, bringing the total disbursements under the $3 billion Standby Arrangement (SBA) to approximately $1.9 billion.
Antoinette Sayeh, Deputy Managing Director and Chair, stated after the board’s approval last week, “There are now tentative signs of activity picking up and external pressures easing.”
The nine-month SBA, endorsed by the Executive Board on July 12 last month, aims to serve as a policy anchor for addressing domestic and external balances, providing a framework for financial support from multilateral and bilateral partners.
In order to secure the bailout, Pakistan implemented challenging measures as per IMF requests: a revamped budget, a record interest rate hike, and substantial increases in electricity and gas prices.
“The authorities took challenging steps to bring both electricity and natural gas prices closer to costs in 2023. Continuing with regularly scheduled adjustments and pushing cost-side power sector reforms are vital to improving the sector’s viability and protecting fiscal sustainability,” emphasized Sayeh.