Finance Minister Ishaq Dar said on Thursday that the International Monetary Fund (IMF) had transferred $1.2 billion to the central bank’s account.

He made the remarks while addressing the media a day after the global money lender approved a $3 billion loan agreement for Pakistan, unlocking crucial funding for the troubled economy.

The board approved the bailout package for the country for an amount of $2.25bn Special Drawing Rights (SDRs) — reserve funds that the institution credits to the accounts of its member nations, the IMF said in a statement. This amounts to about $3bn, or 111 per cent of Pakistan’s quota, it said.

In his address, Dar noted that the IMF’s Executive Board had approved the standby agreement with Pakistan (SBA). He also noted that this was a nine-month programme under which Islamabad would receive $3bn.

He said that when the SBA was finalised, it was decided that $1.2bn would be given upfront while the “balance amount” of $1.8bn would be handed over after two reviews in November and February.

“So in that regard, I want to share the information that the upfront payment of $1.2bn, the IMF has transferred it to the State Bank of Pakistan’s (SBP) account.”

He said that the funds would shore up Pakistan’s foreign exchange reserves, noting that this would also include the $1bn transferred by the United Arab Emirates a day earlier.

The minister said that there had been a $4.2bn increase in the SBP’s reserves during the week. “So I am expecting that our forex reserves will close at $13-14bn by tomorrow. The state bank will give the exact numbers,” he said.

Dar also took the opportunity to thank Prime Minister Shehbaz Sharif, saying that the process with the IMF had been ongoing for the past eight months. He said that Pakistan went for a “smaller” SBA with the IMF 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.”

Later in the day, the SBP said Pakistan’s foreign exchange reserves rose by $61 million to $4.52 billion in the week ending July 7.

“During the week ended on July 7, SBP reserves increased by US$ 61 million to US$ 4,524.0 million,” the central bank said.

It elaborated that during the current week, SBP received an inflow of $2bn from the Kingdom of Saudi Arabia, $1bn from the United Arab Emirates and around $1.2bn from the IMF.

“These inflows will be reflected in SBPs FX reserves for the week ending on 14-Jul-2023,” it added.

Meanwhile, US Secretary Antony Blinken, in a tweet today, welcomed the approval of the $3 billion Standby Arrangement for Pakistan.

“We stand by the Pakistani people during these hard times and welcome the International Monetary Fund’s approval of a program to support Pakistan,” he said.

“We urge Pakistan to continue working with IMF toward macroeconomic reforms and sustainable economic recovery,” the US secretary added.

Additional input from Reuters