WASHINGTON: The executive board of the International Monetary Fund (IMF) will meet on July 12 to review, and possibly endorse, a $3 billion Standby Arrangement (SBA) for Pakistan, finalised last week.

Pakistan expects the board also to release the first tranche of $1.1bn as part of the loan programme. The initial disbursement is contingent upon board approval.

Pakistan was absent from an earlier schedule released in June, igniting speculation that the IMF was not going to release funds from an earlier programme that expired on June 30. On June 29, the IMF and Pakistan reached a stand-by arrangement (SBA) to ease the country’s financial crisis. The nine-month SBA, if approved, will bring $3bn, or 111pc of Pakistan’s IMF quota.

The board’s approvals are generally granted once a staff-level agreement (SLA) is done. The Pakistan government was expecting about $2.5bn from the IMF, but it was given $3bn. Pakistan had earlier cleared eight of the 11 listed programme reviews, with the ninth review pending since November last year.

The SBA, subject to the IMF board approval, offers much-needed relief to a country still grappling with a severe balance of payments crisis and declining foreign exchange reserves.

Meanwhile, Pakistan has submitted a letter of intent to the IMF, assuring the lender that no new tax amnesty will be introduced in the next nine months.

The letter, signed by Finance Minister Ishaq Dar and the State Bank governor, guarantees the removal of trade barriers and upholding commitments to other financial institutions and bilateral donors that have provided loans to the country.

Published in Dawn, July 5th, 2023