SBP receives first tranche of $1.2b from IMF

PM says SBA will support government's economy stabilization efforts

ISLAMABAD:

Finance Minister Ishaq Dar has confirmed that the International Monetary Fund (IMF) has transferred $1.2 billion to the State Bank of Pakistan (SBP) as the first tranche of a $3 billion stand-by arrangement (SBA).

In a video statement issued on Thursday, Dar said that the global money lender has transferred the first installment to the central bank as part of the bailout package.  "The country will receive the remaining amount after two reviews—one in November and the other in February next year," he added.

A day earlier, on Wednesday, the IMF Executive Board approved the $3 billion bailout package that may save Pakistan from default and put it back on the reforms path—a journey that Islamabad undertook only after friendly countries linked their support to the fund’s deal.

The board approved a nine-month SBA in the amount of SDRs 2.25 billion or about $3 billion. The amount is equal to 111% of Pakistan’s quota.

The SDRs that stand for special drawing rights are supplementary foreign exchange reserve assets defined and maintained by the IMF. The SDRs are units of account for the IMF, and not a currency per se. They represent a claim to currency held by IMF member countries for which they may be exchanged
The finance minister said this funding is expected to significantly improve the country's reserves--a much-needed change for the cash-strapped country that had reported foreign exchange reserves barely enough to cover a month's exports last week.

"We expect that our foreign exchange reserves will be between $13 and $14 billion [following the release of the funds].” said Dar. He also extended his gratitude towards his team and the premier for their unwavering support in pushing the IMF deal through.

Meanwhile, Prime Minister Shehbaz Sharif has expressed hope that the SBA will lend a helping hand to his government's "efforts to stabilise the economy and achieve macroeconomic stability".

"It bolsters Pakistan's economic position to overcome immediate- to medium-term economic challenges, giving [the] next government the fiscal space to chart the way forward," he said
With the improved capital inflow -- thanks to the IMF as well as friendly countries -- the Pakistani currency on Thursday improved by Rs2.14 to Rs275.34 against the US dollar in the interbank market.

Market reports suggest that the currency had briefly gained Rs5.47 and recovered to Rs272 against the greenback in the early hours of trading today, but failed to sustain the significant surge.

This is the third consecutive working day that the rupee has maintained an upward trend amid positive developments, rising cumulatively by around Rs4 to Rs275 per US dollar at present.