Pakistan to receive $452.5m from IMF in next few days

Pakistan will receive $452.5 million from the International Monetary Fund (IMF) in next few days as the IMF Executive Board approved it on Thursday in Washington.

The second tranche of $452.5 million is from $6 billion package after Islamabad managed to meet all targets set for the first review of the programme. The Executive Board of the IMF approved the first review of the programme for July-September period of fiscal year 2019-20. In November, Pakistan and the IMF had reached a staff-level agreement on completion of the first review of the $6 billion programme.

The IMF’s second tranche is expected to push the gross official foreign currency reserves over $11 billion. During the week ending December 13, 2019, the SBP reserves increased $1.7 billion to $10.9 billion. This increase is attributed to multilateral and other official inflows, including proceeds of $1.3 billion received from the Asian Development Bank.

“The completion of the review will allow authorities to draw SDR 328 million (about US$452.4 million), bringing total disbursements to SDR 1,044 million or about $1.44 billion,” according to a statement issued by the IMF after the board meeting.

“Pakistan’s programme is on track and has started to bear fruit. However, risks remain elevated. Strong ownership and steadfast reform implementation are critical to entrench macroeconomic stability and support robust and balanced growth,” it added.

In the statement, the IMF once again emphasised upon faster progress to improve the AML/CFT framework and said that swift adoption of all the necessary measures was needed to exit the FATF’s list of jurisdictions with AML/CFT deficiencies. The IMF statement came about a month before Joint Review Group of the Asia-Pacific Group will review progress on the FATF action plan implementation.

Pakistan met the conditions on net international reserves, reduction in net foreign currency swaps, reduction in primary deficit, zero borrowing from the central bank and cap on issuance of new sovereign guarantees.

The current account deficit shrank $4.9 billion or 73% to $1.8 billion during first five months of this fiscal year, according to the SBP. There is consensus among the independent economists that the demand-curb measures that the SBP and the Finance Ministry took were more than the requirements.

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