By Ariba Shahid
(Reuters) – The International Monetary Fund’s board has approved a roughly $700 million loan for Pakistan under a $3 billion bailout, the finance ministry said.
The IMF’s completion of its first review of the programme allows for an immediate disbursement of special drawing rights worth around $700 million, bringing the total disbursements under the Standby Arrangement (SBA) to $1.9 billion, the ministry said on social media platform X.
The South Asian country is operating under a caretaker government after the IMF loan programme, approved in July, helped avert a sovereign debt default.
Ahead of the bailout, Pakistan had to undertake a slew of measures demanded by the IMF, including revising its budget, a hike in its benchmark interest rate, and increases in electricity and natural gas prices.
An IMF mission led by Pakistan mission chief Nathan Porter concluded its visit in November. It reviewed whether Pakistan was on track to meet benchmarks set under the SBA agreed in July.
Under the bailout deal, the IMF also got Pakistan to raise $1.34 billion in new taxation to meet fiscal adjustments. The measures fuelled all-time high inflation of 38% year-on-year in May, the highest in Asia, which is still hovering above 30%.
“IMF funding along with recent inflows from multilateral lenders will further help the Pakistani rupee, that is fairly stable (over the) last few months,” said Mohammad Sohail, CEO of Topline Securities.
He added that this new tranche would help Pakistan in getting rollovers from friendly countries like the United Arab Emirates, China and Saudi Arabia and ease external debt repayment pressure.
(Reporting by Ariba Shahid in Karachi, and Akanksha Khushi in Bengaluru; Editing by Nick Macfie)
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