The State Bank of Pakistan has received a loan tranche of $1.023 billion from the International Monetary Fund under the Extended Fund Facility.
The State Bank of Pakistan (SBP) has obtained the second tranche of $1.023 million from the International Monetary Fund (IMF) as part of the Extended Fund Facility (EFF) program.
The sum will be recorded in SBP’s foreign exchange reserves for the week concluding on 16th May 2025, according to a statement from the bank.
Last Monday, the IMF’s Executive Board officially sanctioned a $1 billion payout for Pakistan under the EFF, representing a crucial advancement in the nation’s ongoing economic stabilisation initiatives.
The tranche was approved after Pakistan successfully met essential performance requirements. The EFF initiative, intended to assist nations experiencing balance-of-payment challenges, extends over a duration of 37 months.
Moreover, Pakistan is a participant in the Resilience and Sustainability Facility (RSF), designed to bolster climate resilience for a duration of 28 months. The present payment exclusively relates to the EFF.
The prompt disbursement of cash is anticipated to offer vital assistance to Pakistan’s foreign exchange reserves, alleviate fiscal strain, and sustain economic momentum amidst prevailing global financial instability.
The IMF’s decision followed Pakistan’s attainment of significant structural criteria, such as enhancements in the tax-to-GDP ratio, the maintenance of a primary fiscal surplus, and the achievement of province budget targets.
Economic specialists have praised the development, emphasising that this money infusion is crucial for Pakistan’s economic stability and investor trust. They underscored that it will not only alleviate immediate economic difficulties but also enhance Pakistan’s standing with international lenders.
Previously, reports indicated that India had sought to impede the clearance process. Nevertheless, the initiative was unsuccessful, prompting India to purportedly retract its representation from the IMF Executive Board.
Negotiations between Pakistan and the IMF on the budget
The budget negotiations between the international financial institution and the Pakistani government are scheduled to commence today.
The virtual discussions between Pakistan and the IMF concerning budget preparation will now occur online, as the IMF delegation was unable to arrive in the country as scheduled on Wednesday.
Sources indicate that budget discussions with the IMF will occur online this week, while the presence of the financial agency’s delegation is anticipated next week.
Sources indicated that conversations over budget preparation were planned for Wednesday (yesterday), and now virtual negotiations will occur this week, with the delegation arriving for discussions next week. Sources indicated that budget ideas will be presented to the IMF during the online negotiations.
The economic team of Pakistan has finalised its preparations to brief the IMF, and its delegation will assess budget preparation during virtual sessions. Officials from the Ministry of Finance and the Federal Board of Revenue will conduct virtual negotiations.
The discussions, which will persist until May 16, will focus on the forthcoming budget.
The parties will deliberate on income and expenditure, with the Pakistani government informing the lender regarding tax and non-tax earnings.
Reports indicate that special sessions will be convened to persuade the IMF to reduce the tax burden on the already burdened salaried class.
