Pakistan receives second tranche of $454 million from IMF
The US$454 million received from the IMF will be added in forex reserves by next week.
ISLAMABAD (Dunya News) – Pakistan on Thursday has received the second tranche of US$454 million from the International Monetary Fund (IMF).
The US$454 million received from the International Monetary Fund (IMF) will be added in forex reserves by next week.
The Forex reserves of the country currently stood around US$17.595 billion, as the reserves of the State Bank of Pakistan (SBP) stood at US$10.907 billion, other banks US$6.688 billion.
In July, Pakistan had received the first tranche of $991.4 million of the $6 billion bailout package International Monetary Fund (IMF) bailout. This was equivalent to a special drawing right (SDR) of $716 million. An SDR is an IMF unit for a financial transaction, which includes a mixed basket of currencies.
IMF Approves $6 Billion Loan
In July, the International Monetary Fund (IMF) had given Pakistan a $6 billion, three-year loan requested by Prime Minister Imran Khan s government to help resuscitate the country s ailing economy.
With the IMF board s approval, the fund on July 3 released a $1 billion tranche immediately to Pakistan, saying in a statement that the program aims to "support the authorities economic reform program" and to help "reduce economic vulnerabilities and generate sustainable and balanced growth."
The fund will review Pakistan s performance on a quarterly basis, phasing release of the additional aid over the next 39 months.
The program required “decisive fiscal consolidation” and a multi-year plan to strengthen Pakistan’s notoriously weak tax system as well as large scale reforms that were likely to pile pressure on the government of Prime Minister Imran Khan.
Khan came to power last August, inheriting an economy plagued with problems. But he was initially deeply reluctant to turn to the IMF, which has provided more than 20 bailout packages to Pakistan over the decades.
However, despite securing billions of dollars in loans from friendly countries including China, Saudi Arabia and the United Arab Emirates, mounting economic headwinds forced his government to turn to the fund.
With foreign exchange reserves shrinking to only $7.3 billion, less than the equivalent of two months’ worth of imports, and the budget deficit set to top 7% of gross domestic product this year, Pakistan faces tough economic medicine to tackle problems that have been years in the making.
Dominated by agriculture and textiles and with a large informal sector that pays no tax, the economy has struggled to develop export industries and successive governments have spent heavily to defend an overvalued exchange rate.
The $60 billion China Pakistan Economic Corridor, launched in 2015, had promised a new beginning. Its infrastructure projects were intended to become a new foundation for growth, but they also required heavy imports of capital equipment, widening the trade deficit.
