The IMF board has approved a $7 billion bailout package for Pakistan, with a $1.1 billion tranche anticipated to be released later this month.
WASHINGTON: The International Monetary Fund’s (IMF) Executive Board approved a $7 billion Extended Fund Facility (EFF) for Pakistan on Wednesday, paving the way for the release of the first $1.1 billion tranche by September 30, 2024.
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Loan Update
The interest rate on the loan is below 5%, sources in the Ministry of Finance said, adding that the IMF is expected to disburse the second installment within this fiscal year.
Confirming the development, State Bank of Pakistan (SBP) Governor Jameel Ahmed stated that Islamabad would receive the first tranche of $1.1 billion, adding that the country has met all the global lender’s requirements.
In July this year, Pakistan and the IMF reached an agreement on a 37-month loan program, which Prime Minister Shehbaz Sharif hopes will be the country’s last.
The approval came after the confirmation of $12 billion in bilateral loans from Saudi Arabia, China, and the UAE, along with $2 billion in external financing.
According to insiders, Pakistan owes $5 billion to Saudi Arabia in cash deposits. Additionally, Pakistan holds $4 billion in deposits from China and $3 billion from the UAE.
Pakistan needed to secure $2 billion in external financing from bilateral and commercial lenders as a prerequisite for the IMF board’s approval.
Financial Support
The global lender later identified an external financing gap of $2 to $2.5 billion and secured confirmation from the kingdom through a Saudi oil facility. Additionally, it obtained a $400 million facility from the ITFC, funded by the IsDB, along with financing from Standard Chartered Bank and other commercial banks based in the Middle East.
For years, Islamabad has relied heavily on IMF programs, at times nearing the brink of sovereign default and turning to countries such as the United Arab Emirates and Saudi Arabia for financing to meet the external targets set by the IMF.
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