According to Dawn, the International Monetary Fund (IMF) has granted approval for a $3 billion bailout program for Pakistan on Wednesday, offering significant relief to the country’s struggling economy. The IMF executive board has stated that around $1.2 billion will be disbursed immediately to provide urgent assistance, while the remaining installments will be provided at a later stage.
The amount approved, however, is higher-than-expected funding for Pakistan.
The approved bailout amount of $3 billion, to be spread over a period of nine months, comes when the nation was eagerly anticipating the disbursement of the remaining $2.5 billion from a bailout package of $6.5 billion that was initially agreed upon in 2019 but had expired in June.
The latest development also comes after June 29 Standby Arrangement reached between Pakistan and IMF to address the financial crisis faced by the country.
“The Executive Board of the International Monetary Fund approved a 9-month Stand-By Arrangement (SBA) for Pakistan for an amount of SDR2,250 million (about $3 billion, or 111 per cent of quota) to support the authorities economic stabilisation programme,” IMF said in a statement.
Challenging economic circumstances
The IMF pointed out that Pakistan is facing a challenging economic situation. Speaking of a combination of adverse conditions, IMF said, “A difficult external environment, devastating floods and policy missteps have led to large fiscal and external deficits, rising inflation and eroded reserve buffers in FY23.”
Notably, the approval from the IMF comes after Saudi Arabia and the United Arab Emirates (UAE) made substantial deposits of $2 billion and $1 billion, respectively, into the State Bank of Pakistan.