Islamabad, November 21, 2023 (PAKONOMY): In a significant development, the Executive Board of the International Monetary Fund (IMF) is set to approve the Staff-Level Agreement (SLA) with Pakistan on December 7. This marks the first review of the $3 billion Stand-By Arrangement (SBA), leading to the expected disbursement of around $700 million on December 8.
The SLA, achieved on November 15 in Islamabad, allows Pakistan to access SDR 528 million (approximately $700 million), bringing the total disbursements under the nine-month $3 billion SBA to nearly $1.9 billion.
Following the SLA announcement, Caretaker Finance Minister Dr Shamshad Akhtar revealed the postponement of a $1.5 billion Eurobond launch due to adverse global financial conditions. The minister also committed to ongoing adjustments in electricity and gas rates to prevent further accumulation of circular debt.
The IMF mission emphasized the importance of a return to a market-determined exchange rate, addressing geopolitical tensions, potential commodity price increases, and challenging global financial conditions. Timely disbursement of committed external support was underscored as critical to supporting Pakistan’s policy and reform efforts.
The agreement supports Pakistan’s commitment to advancing fiscal consolidation, implementing cost-reducing reforms in the energy sector, restoring a market-determined exchange rate, and pursuing governance reforms for attracting investment and job creation. The IMF acknowledged a nascent economic recovery, supported by international partners and increased confidence.
While anticipating a deceleration in inflation over the coming months, the IMF cautioned that Pakistan remains susceptible to external risks such as geopolitical tensions, rising commodity prices, and global financial tightening. Strengthening macroeconomic sustainability and achieving balanced growth were identified as key priorities under the SBA.
In summary, the approval of the Staff-Level Agreement by the IMF Board is a significant step forward for Pakistan, unlocking crucial financial support and reaffirming the commitment to economic reforms and sustainability.