January 18, 2024
ISLAMABAD – The International Monetary Fund (IMF) has released the much awaited $700 million tranche, shoring up the State Bank of Pakistan’s (SBP) foreign reserves.
The SBP confirmed the development in a statement, adding that the tranche equivalent to $705.6 million was released on January 16 (Tuesday) “following the successful completion of the first review by the Executive Board of IMF under Stand By Arrangement (SBA)”
“The tranche release is in line with market expectations,” said Yousuf M. Farooq, director of research at Chase Securities. “Pakistan will have to continue with a tight fiscal policy to ensure economic stability and will have to enter a new EFF IMF program as soon as this SBA ends to ensure roll over of its external debt.
“The economic situation has improved significantly with Pakistan posting a current account surplus in December and a relatively stable currency. This will also ensure disinflation in coming months.”
Ali Farid Khwaja, Chairman, KTrade Securities Limited, said “the improvement of Pakistan’s relationship with the IMF and their satisfaction with Pakistan’s reforms is a great achievement, especially given where we were just six months ago.
“More than just the monetary flows, it’s a signal of confidence which makes Pakistan investable for other investors. This is the reason why foreign investors are investing in Pakistani stocks as well.”
“IMF’s significance is more than just the money. The reforms are not easy and hence credit goes to the interim government in implementing hard decisions. We need consistency on reforms to reestablish investor confidence which is necessary for the success of privatization plans.”
Khurram Schehzad, the chief executive of financial consultancy firm Alpha Beta Core, also said that the development was “expected”, adding that the next review is likely to be “smooth” as well.
“The challenge will be the new larger IMF Program under the new govt with reforms on the agenda,” he added.
UAE confirms rollover
In another statement on social media platform X, the SBP said the United Arab Emirates had confirmed the rollover of two deposits of $1.0 billion each.
The deposits, which were scheduled to mature in January, have been placed with the SBP for another year, it added.
Earlier, the prime minister had written a letter to the UAE government requesting the rollover of a $2bn loan. According to experts, it would improve SBP’s foreign reserves position which will boost investor confidence.