The IMF deal has effectively averted the threat of default. (Representational)
The IMF has transferred USD 1.2 billion to Pakistan, Finance Minister Ishaq Dar said on Thursday, a day after the global lender approved a USD 3 billion bailout programme for the cash-strapped country.
The International Monetary Fund (IMF) had signed a Stand-by Agreement at the end of June to provide Pakistan a short-term loan for a period of nine months and its executive board formally approved the USD 3 billion bailout programme on Wednesday to support the government's efforts to stabilise the country's ailing economy.
It said that the board approved the bailout package for the country for an amount of USD 2.25 billion Special Drawing Rights (SDRs) - reserve funds that the institution credits to the accounts of its member nations, which amounts to about USD 3 billion.
On Thursday, Finance Minister Dar announced that the global lender had transferred USD 1.2 billion to the State Bank of Pakistan.
Addressing the media, Mr Dar said when the Standby Arrangement (SBA) was finalised, it was decided that USD 1.2 billion would be given upfront while the "balance amount" of USD 1.8 billion would be handed over after two reviews in November and February.
"I want to share the information that the upfront payment of USD 1.2 billion, the IMF has transferred it to the State Bank of Pakistan's (SBP) account," he said.
The finance minister said that the IMF's Executive Board had approved the SBA with Pakistan and noted that this was a nine-month programme under which Islamabad would receive USD 3 billion.
He said that the funds would shore up Pakistan's foreign exchange reserves, noting that this would also include the USD 1 billion transferred by the United Arab Emirates a day earlier.
The Finance Minister said that the foreign reserves increased by USD 4.2 billion during the week after Saudi Arabia and the UAE provided USD 2 billion and USD 1 billion respectively. "So I am expecting that our forex reserves will close at USD 13-14 billion by tomorrow. The state bank will give the exact numbers," he said.
The IMF deal has effectively averted the threat of default.
The development came two weeks after the two sides reached a staff-level agreement over the stand-by arrangement.
The global lender on Wednesday said that the programme would focus on the "implementation of the FY24 budget to facilitate Pakistan's needed fiscal adjustment and ensure debt sustainability".
"The arrangement comes at a challenging economic juncture for Pakistan. A difficult external environment, devastating floods, and policy missteps have led to large fiscal and external deficits, rising inflation, and eroded reserve buffers" in the fiscal year 2023," Washington-based IMF said in the statement.
Mr Dar said that Pakistan went for a "smaller" SBA with the global lender instead of the ninth review of the loan programme.
"This (programme) has been limited to nine months so that whichever government comes into power after the elections can make its owns decisions," the minister said.
Pakistan's economy has been in a free fall mode for the last many years, bringing untold pressure on the poor masses in the form of unchecked inflation, making it almost impossible for a vast number of people to make ends meet.
Pakistan had been struggling to arrange enough foreign exchange to satisfy the IMF, which refused to provide the remaining USD 2.5 billion out of a USD 6.5 billion loan programme signed in 2019 and expired on June 30 this year.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)