ISLAMABAD: The State Bank of Pakistan (SBP) on Tuesday announced that it had received the third tranche of International Monetary Fund’s (IMF) $6 billion dollar loan.
In a tweet, the central bank said, “#SBP has received IMF tranche of US$498.7 million (equivalent to SDR 350 million) under the Extended Fund Facility.”
#SBP has received IMF tranche of US$ 498.7 million (equivalent to SDR 350 million) under the Extended Fund Facility.
— SBP (@StateBank_Pak) March 30, 2021
The tranche has resumed Pakistan’s $6 billion loan program which had been on hold since the outbreak of the COVID-19 pandemic in the country in February 2020. With the receipt of the latest tranche, Pakistan has received a total of around $2 billion under the loan program.
According to a report, last month’s staff level agreement was endorsed by the international creditor’s Executive Board, which paved the way for the release of the next loan tranche.
It is worth mentioning here that IMF has already given $1.45 billion in the previous two tranches out of the $6 billion agreed between the international creditor and Pakistan.
Citing sources, a report stated that Pakistan would be in a difficult position this year as it would impose taxes amounting to Rs700 billion and reduce expenditures in the budget for the next fiscal year.
Last month, as both sides reached the staff level agreement, a joint statement was issued to mark the occasion, wherein the Fund said that “the package strikes an appropriate balance between supporting the economy, ensuring debt sustainability and advancing structural reform”. “Pending approval of the Executive Board, the reviews’ completion would release around $500 million,” it added.
Analysts said that the continuation of the IMF loan program has revived global investors’ confidence in Pakistan. This has paved the way for Pakistan to raise $2.5 billion from international markets through the sale of a 5 to 30-year Eurobond.
The program has also helped the country to get another $10-12 billion each from the World Bank (WB) and the Asian Development Bank (ADB) over the next five years.
The fresh receipt including the issuance of Eurobonds that fetched over $2.5 billion. This has helped to strengthen the value of the Rupee against the Dollar which is hovering between Rs. 151 and 152. Consequently, the country’s foreign exchange reserves and the current account position will now improve further.