IMF board to meet today to decide on $3b loan agreement

Board likely to approve issuance of first installment of $1.1 billion under $3 billion loan agreement

The International Monetary Fund’s (IMF) executive board is set to meet on Wednesday to decide on endorsing the staff-level agreement with Pakistan, providing a $3 billion stand-by arrangement (SBA) to assist the cash-strapped country.

According to sources, the board is also likely to approve the issuance of the first installment of $1.1 billion under the $3 billion loan agreement.

Pakistan has signed a standby agreement with the IMF worth $3 billion for nine months, under which the executive board of the global lender will approve the release of an installment for Pakistan.

Read Pakistan sets sights on stop-gap IMF deal

It is pertinent to note that the matter of external financing has also been settled between the Ministry of Finance and the global money lender has accepted the financing gap plan of $8.2 billion sent by the ministry.

Pakistan receives $2b from KSA

A day earlier, Pakistan received a $2 billion Saudi loan for one year as part of a plan to raise funds under a condition set by the IMF for the new bailout package, providing a breather to the beleaguered government.

The minister did not officially disclose the terms of the loan but a senior cabinet minister had said two weeks ago that Saudi Arabia had given the loan for one year and the interest rate was higher than the previous facility rate of 4%.

IMF, Pakistan reach staff-level agreement

Last month, the IMF and Pakistan reached a staff-level agreement on the $3 billion stand-by arrangement, a long-awaited decision for a country facing a critical risk of default.

The agreement, subject to IMF board approval, offers much-needed relief to Pakistan - which is grappling with a severe balance of payments crisis and declining foreign exchange reserves.

According to a press statement issued by the lender on June 29, the new SBA will support Pakistan authorities’ immediate efforts to stabilise the economy from recent external shocks, preserve macroeconomic stability and provide a framework for financing from multilateral and bilateral partners.

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“The new SBA will also create space for social and development spending through improved domestic revenue mobilisation and careful spending execution to help address the needs of the Pakistani people.

“Steadfast policy implementation is key for Pakistan to overcome its current challenges, including through greater fiscal discipline, a market-determined exchange rate to absorb external pressures, and further progress on reforms, particularly in the energy sector, to promote climate resilience, and to help improve the business climate,” it said.

According to the IMF's press statement, the new SBA aims to support Pakistan in stabilising its economy, addressing recent external shocks, maintaining macroeconomic stability and providing a framework for financing from bilateral and multilateral partners.