Pakistan receives first tranche of $7 billion IMF loan

The State Bank of Pakistan (SBP) has received the first tranche of SDR 760 million, equivalent to $1.026 billion from IMF. These funds will be reflected in SBP's liquid reserves, set to be released on Thursday, October 3.

The International Monetary Fund (IMF) Executive Board on Wednesday approved a 37-month Extended Fund Facility for Pakistan, amounting to $7 billion.

The IMF's decision comes as a significant relief for Pakistan's struggling economy. The three-year loan program aims to support Pakistan's ongoing efforts to strengthen its economic framework and create conditions for more inclusive and resilient growth.

This loan marks Pakistan's 24th IMF payout since 1958. The South Asian nation agreed to the deal in July, committing to implement unpopular reforms, including broadening its chronically low tax base. The agreement comes at a critical time, as Pakistan narrowly avoided default last year amid political turmoil, catastrophic 2022 monsoon floods, and a global economic downturn.

Prime Minister Shehbaz Sharif, in a statement made in July, underscored the importance of this program, stating, "This program should be considered the last program." The IMF's approval follows Pakistan's fulfillment of all conditions set by the lender, including structural reforms and increased tax measures.

Despite the immediate relief, Pakistan's economic challenges remain formidable, with high inflation and staggering public debts. The IMF has praised Pakistan for taking key steps to restore economic stability but also highlighted the need for continued efforts to address vulnerabilities and structural challenges.