Pakistan is set to enter negotiations with the International Monetary Fund (IMF) over the third and final loan tranche of $1.1 billion under the $3 billion Stand-By Arrangement (SBA).
Quoting Caretaker Finance Minister Dr Shamshad Akhtar, the Express Tribune reported Friday that negotiations with the global lender would start soon. However, the IMF team may come a bit later.
The minister pointed out that bilateral creditors and multilateral agencies would not pay anything without the IMF program. She also highlighted that Pakistan has been priced out of the international capital market due to poor credit ratings.
It is pertinent to mention here that Pakistan borrowed $5.968 billion from multiple financing sources during the first half (July-December) of the current fiscal year 2023-24 (FY24) compared to $5.595 billion borrowed during the same period of 2022-23, according to latest data issued by the Economic Affairs Division (EAD).
The government has budgeted $2.4 billion from the IMF for the current fiscal year 2023-24 and received $1.2 billion as the first tranche of the $3 billion SBA in July 2023. However, the EAD data does not reflect it. Further, there is no mention of the $1 billion disbursed by the UAE. If the IMF and UAE inflows are added, the total inflows would reach $8.168 billion during the first half of the current fiscal year.
The country’s foreign exchange reserves had dipped below $7 billion on December 15. However, successful talks with the IMF and subsequent inflows have pushed reserves to over $8 billion as of January 12.
Pakistan also received the second loan tranche of $705 million from the IMF this week, which has pushed reserves closer to $9 billion and will be reflected in the reserves position next week.