In a significant development, the International Monetary Fund (IMF) has officially confirmed that its Executive Board will convene on January 11 in Washington to deliberate on Pakistan’s request for the completion of the first review and the release of the second tranche, amounting to $700 million, as reported by The News on Tuesday.
Caretaker Minister for Finance Dr. Shamshad Akhtar and State Bank of Pakistan (SBP) Governor Jameel Ahmad recently signed a Letter of Intent (LoI), affirming their commitment to fulfilling all conditions outlined by the lender. This commitment is crucial for obtaining approval for the second tranche under the $3 billion Standby Arrangement (SBA).
Pakistani authorities have reiterated their dedication to leaving no stone unturned in ensuring fiscal consolidation to achieve the program’s objectives. The market-based exchange rate mechanism is among the strategies they are determined to pursue.
Sources close to the matter have confirmed that the signed LoI has been dispatched to the IMF’s headquarters and shared with the Board of Directors (BoD). The BoD is expected to consider Pakistan’s request to release the second tranche within the next few days following their meeting.
Despite the Christmas and New Year holidays in the USA, the IMF’s board calendar indicates that a meeting is scheduled for January 11 to address Pakistan’s request to release the second tranche under the SBA program.
Pakistan had previously reached a staff-level agreement with the IMF in November 2023 under the $3 billion SBA. The approval of the board is awaited to receive the second tranche. The current SBA program is set to expire on April 14, 2024.
In December 2023, IMF Executive Director Bahador Bijani acknowledged an overall improvement in Pakistan’s economic situation, stating that the “Pakistani authorities have delivered.” This positive sentiment was expressed at an event hosted by Pakistan’s ambassador to the US, where representatives from International Financial Institutions, including IMF, IFC, World Bank, and MIGA, gathered at Pakistan House in Washington.
Nathan Porter, IMF Mission Chief to Pakistan, expressed satisfaction over the recently concluded staff-level agreement. He noted that the actions and policies of the current government reflect its commitment to steering the country toward stabilization.
As Pakistan faces challenges such as Asia’s fastest inflation, approximately $1 billion in dollar-denominated debt due this year, and upcoming elections in February, the IMF’s ongoing support plays a pivotal role in shaping the country’s economic landscape.