The International Monetary Fund (IMF) on Wednesday authorized a 9-month Stand-By arrangement for Pakistan to support the nation’s economic stabilization programme, providing respite to the cash-strapped government.
In a statement, the IMF stated, “Today, the Executive Board of the International Monetary Fund (IMF) approved a 9-month Stand-By Arrangement (SBA) for Pakistan for an amount of SDR 2,250 million (roughly USD 3 billion, or 111 percent of quota) to support the authorities’ economic stabilization programme”.
A staff-level agreement (SLA) worth USD 3 billion between Pakistan and the IMF earlier in June provided the cash-strapped nation with much-needed relief.
Following Ishaq Dar’s statement that Pakistan has received USD 1 billion from the UAE as part of its financial commitment to aid Pakistan in receiving the IMF bailout package, the IMF made its announcement on Wednesday.
“We have received USD 1 billion from the UAE”, Ishaq Dar remarked.
According to Geo News, the UAE has put the money into the State Bank account.
Ishaq Dar made the announcement earlier on Tuesday that Saudi Arabia had sent USD 2 billion to the State Bank of Pakistan account to help increase Pakistan’s foreign exchange reserves.
Pakistan inked a short-term IMF agreement on June 30 under which Islamabad will receive USD 3 billion over nine months, subject to IMF board approval.
After months of delays, cash-strapped Pakistan was able to get an IMF rescue package after implementing tough economic measures such as hiking interest rates and boosting taxes to meet IMF requirements.
Pakistan Prime Minister Shehbaz Sharif has described the IMF’s SBA clearance as a significant step forward in the government’s attempts to stabilize the country’s economy.
He emphasized that the IMF’s decision strengthens Pakistan’s economic position while it faces economic challenges.
He thanked IMF Managing Director Kristalina Georgieva for her assistance.
Shehbaz Sharif tweeted, “The approval of Stand-by Agreement of $3 billion by the IMF’s Executive Board a little while ago is a major step forward in the government’s efforts to stabilise the economy and achieve macroeconomic stability. It bolsters Pakistan’s economic position to overcome immediate- to medium-term economic challenges, giving next government the fiscal space to chart the way forward”, through his official Twitter handle.
“This milestone, which was achieved against the heaviest of odds & against seemingly impossible deadline, could not have been possible without excellent team effort. I would commend Finance Minister Ishaq Dar & his team at the Ministry of Finance for their hard work. My special thanks are also due to @KGeorgieva, MD of IMF and her team for their support & cooperation”, he added in his tweet.
The approval of Stand-by Agreement of $3 billion by the IMF's Executive Board a little while ago is a major step forward in the government's efforts to stabilise the economy and achieve macroeconomic stability. It bolsters Pakistan's economic position to overcome immediate- to…
— Shehbaz Sharif (@CMShehbaz) July 12, 2023
Meanwhile, Pakistan’s declining economic situation, inflation, uncertain policy environment, and unpredictable banking rates are depressing the business elite and causing them to lose faith in the economy.
Overseas Investors Chambers of Commerce and Industry (OICCI) recently highlighted a bleak picture of corporate confidence in Pakistan’s industry and economy.
The overall business confidence score (BCS) was negative 25% during the survey performed in March-April 2023 (Wave 23), which was 21% lower than the prior level of negative 4% found during the previous similar survey done in September-October 2022 (Wave 22).
A 25% drop in 6 months reflects the rate at which confidence in the Pakistani industry is eroding. According to InsideOver, the three most significant impediments to business growth cited in the poll were high inflation (82% of respondents), excessive taxation (74%), and Pakistani rupee depreciation (72%).
Given the results, Amir Paracha, President of OICCI, stated that it is not surprising that overall Business Confidence has declined in light of the turbulent and extremely hard economic conditions over the previous year.
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