The International Monetary Fund (IMF) Executive Board has approved the first review of the 37-month, $7-billion Extended Fund Facility (EFF) for Pakistan, as per a statement from the Prime Minister’s Office (PMO) on Friday.
“PM Shehbaz Sharif expresses satisfaction over the IMF’s approval of a $1 billion tranche for Pakistan and the failure of India’s underhanded tactics against it,” the PMO statement read.
Indian Foreign Secretary Vikram Misri had said that India’s executive director at the IMF would put forward the country’s position at the board meeting on Friday.
“India is attempting to divert attention from our national development through unilateral aggression and nefarious conspiracies,” the prime minister said. “International institutions have responsibly rejected India’s false propaganda.”
Despite India’s attempts, the IMF on Thursday reiterated that its Executive Board meeting pertaining to Pakistan’s bailout programme would proceed as planned on May 9 (today).
“As has been announced, the Board meeting for the first EFF [Extended Fund Facility] review and RSF [Resilience and Sustainable Facility] is scheduled for May 9,” said IMF spokesperson, in a statement provided to Business Recorder then.
Tensions between Pakistan and India rose after 26 tourists were killed in the Indian Illegally Occupied Jammu and Kashmir (IIOJK).
Pakistan military brought down five Indian Air Force jets, including three Rafale, in retaliation following Indian missile attacks. According to the Inter-Services Public Relations (ISPR), Indian missiles were launched at sites including Bahawalpur, Kotli and Muzaffarabad cities, while India also attacked the Neelum-Jhelum Hydropower Project.
In March, the IMF staff reached a deal with Pakistan for a new $1.3 billion arrangement and also agreed on the first review of the ongoing 37-month bailout programme.
“The IMF team has reached a staff-level agreement (SLA) with the Pakistani authorities on the first review of the 37-month Extended Arrangement under the Extended Fund Facility (EFF), and on a new 28-month arrangement under the IMF’s RSF with total access over the 28 months of around $1.3 billion (SDR 1 billion).
“The staff-level agreement is subject to approval of the IMF’s Executive Board. Upon approval, Pakistan will have access to about $1 billion (SDR 760 million) under the EFF, bringing total disbursements under the programme to about $2 billion,” the Washington-based lender said in its statement.
The Pakistani authorities and the IMF team reached staff-level agreement on the EFF in the amount equivalent to SDR 5,320 million (or about USD 7 billion) on July 12, 2024, which was later approved by the IMF’s Executive Board in the last week of September.
Analysts believe the IMF programme is crucial as it gives the government a roadmap for economic reforms while providing a cushion to the country’s foreign exchange reserves.
Foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by $118 million on a weekly basis, clocking in at $10.33 billion as of May 2. Total liquid foreign reserves held by the country stood at $15.48 billion. Net foreign reserves held by commercial banks stood at $5.15 billion.
