Country's foreign exchange reserves currently at $14.44b
Pakistan will receive the first $1 billion of the promised $6 billion IMF loan programme on July 9, officials in ministry of finance told SAMAA TV.
On July 3, the IMF’s Executive Board approved a 39-month extended arrangement under its Extended Fund Facility (EFF) for Pakistan. The $6 billion will support the government’s economic reform programme.
The arrival of the first tranche will strengthen Pakistan’s foreign exchange reserves, said the officials. Overall, the country’s foreign exchange reserves were recorded at $14.44 billion, which includes the State Bank’s $7.27 billion, as of June 28.
Pakistan will get the remaining $5 billion in installments over the next three years.However, it will be subject to tough economic reforms to put Pakistan’s economy on the path of sustainable and balanced growth and increase its per capita income.
During the course of these three years, Pakistani authorities will have to take measures such as decisive fiscal consolidation and a flexible market determined exchange rate.
“The Fund-supported programme is expected to coalesce broader support from multilateral and bilateral creditors is excess of $38 billion, which is crucial for Pakistan to meet its large financing needs in the coming years,” according to an IMF statement.
Pakistan’s economy is at a critical juncture and the legacy of misaligned economic policies, including large fiscal deficits, loose monetary policy and defence of an overvalued exchange rate, fueled consumption and short-term growth in recent years but steadily eroded macroeconomic buffers and remained largely unaddressed, it observed.
These include a chronically weak tax administration, a difficult business environment, inefficient and loss-making state owned enterprises, amid a large informal economy, said the IMF.
According to the global lender, without urgent policy action, economic and financial stability could be at risk and growth prospects will be insufficient to the meet the needs of a rapidly growth population, it added.