KARACHI: The State Bank of Pakistan on Wednesday received $1.16 billion deposit from the International Monetary Fund (IMF), two days after the much-needed nod of the Fund to immediate disbursement on successful completion of the combined seventh and eighth reviews of a loan facility.

In a late-night tweet, the SBP confirmed the development and expressed the confidence that it would help improve foreign exchange reserves.

“Today, #SBP has received proceeds of USD 1.16 billion (equivalent of SDR 894 million) after the IMF Executive Board completed the combined seventh and Eight review under the Extended Fund Facility (EFF) for Pakistan.

“This will help improve SBP’s foreign exchange reserves and will also facilitate realization of other planned inflows from multilateral and bilateral sources,” the SBP said on Twitter.

Under the Extended Fund Facility (EFF) arrangement — signed in July 2019 — the IMF was to provide $6bn to Pakistan during a 39-month period. The IMF executive board on August 29 approved an extension of the programme until end of June 2023 after a series of negotiations that had been under way for several months.

An official IMF announcement on Monday stated its executive board completed the combined seventh and eighth reviews of the loan facility for Pakistan, allowing immediate disbursement of $1.1 billion to the country. The statement pointed out that the disbursement “brings total purchases (money made available) for budget support under this arrangement to about $3.9 billion.”

The board noted that authorities in Pakistan have taken important measures to address the country’s worsened fiscal and external positions resulting from accommodative policies in FY22 and spillovers from the war in Ukraine. These two factors “have placed significant pressure on the rupee and foreign reserves,” the statement added.

Published in Dawn, September 1st, 2022