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The IMF Gives Green Light to Second Installment Of $700 Million For Pakistan’s Economic Consolidation

The Executive Board of the International Monetary Fund (IMF) has granted approval for the initial evaluation of a $3 billion short-term financial package for Pakistan. This endorsement has led to the disbursement of a subsequent segment totaling $700 million for the South Asian nation. The financial support package is a component of a 9-month Stand-By Arrangement (SBA) designed to bolster Pakistan’s economic consolidation program.

In July of the previous year, the IMF board sanctioned the SBA for Pakistan, delivering crucial support to address the country’s economic adversities. Islamabad received the initial installment of $1.2 billion and the backing for the loan program during the same month.

In November, a staff-level agreement (SLA) was reached between a visiting delegation from the IMF and authorities in Pakistan, clearing the path for the primary evaluation under the SBA. The recent authorization by the IMF’s Executive Board marks a significant milestone in Pakistan’s pursuit of economic recovery.

The cumulative disbursements under the SBA for Pakistan now stand at $1.9 billion following the release of the subsequent segment. This provides vital financial backing for the nation’s economic stability.

The IMF’s endorsement for the provision of roughly $700 million in assistance has given a significant lift to Pakistan’s economy ahead of the upcoming elections. This occurs as the country implements various economic measures, including hikes in energy prices and tax burden, to confront its economic hardships. Nevertheless, these actions have led to a surge in inflation, hitting 38 percent in May of the prior year.

With national elections approaching on February 8, experts underscore the importance of a clear economic strategy to sustain growth and secure future support from the IMF. Dr. Sajid Amin, Deputy Executive Director at the Sustainable Development Policy Institute (SDPI), emphasized the significance of the subsequent evaluation of the program in laying the groundwork for Pakistan’s future economic policies. The incoming government will need to formulate a well-considered economic strategy to secure additional support from the IMF and ensure economic stability.

Pakistan remains steadfast in implementing reforms and measures to fortify its economy amid challenges such as trade and current account deficits, inflation, and low foreign exchange reserves.

Image Source: Kristi Blokhin / Shutterstock

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