Pakistan And IMF Reach Agreement On $1.1Bn SBA Tranche Release

The International Monetary Fund (IMF) and Pakistan have reached a staff-level agreement following the conclusion of the latest round of talks today, paving the way for the release of a $1.1 billion tranche under the Stand By Agreement (SBA).

This agreement, subject to approval by the IMF Executive Board, will see the disbursement of the final tranche of bailout funds secured by crisis-hit Pakistan last year, aimed at averting a debt default. During a five-day visit, IMF’s mission in Pakistan engaged in discussions with Pakistani officials to review the fiscal consolidation benchmarks set for the loan.

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In a statement, the IMF acknowledged improvements in Pakistan’s economic and financial position since the first review, noting a modest growth forecast for 2024 alongside persistently high inflation. It emphasized the need for ongoing policy and reform efforts to address economic vulnerabilities amid challenges posed by elevated external and domestic financing needs and an uncertain external environment.

The IMF highlighted Pakistan’s commitment to continuing the policies initiated under the current program, aimed at strengthening economic and financial stability for the remainder of the year. Pakistani authorities aim to achieve the fiscal year 2024 general government primary balance target, broaden the tax base, and implement power and gas tariff adjustments to mitigate circular debt accumulation.

Furthermore, Pakistan has expressed interest in securing a medium-term fund facility, with authorities aiming to address fiscal and external sustainability weaknesses, bolster economic recovery, and lay the groundwork for robust, sustainable, and inclusive growth.