KARACHI: Pakistan has received inflows amounting to US 2.75 billion dollars from the International Monetary Fund (IMF) for economic support in the wake of Covid-19 pandemic.
In the first week of this month, the IMF board approved allocation of new funds for Pakistan and other member countries to help them for combating the challenges arising from the Covid-19 pandemic and to support for sustainable economic growth.
The State Bank of Pakistan (SBP) on Tuesday confirmed on its Twitter account that it has received $ 2.75 billion from the IMF, as part of Special Drawing Rights (SDR) allocation announced by the IMF recently.
Economists said that these inflows will help to build the country's foreign exchange reserves and reduce the pressure on external account.
The country's total liquid foreign exchange reserves stood at $ 24.6 billion during the week ended August 13, 2021. With the arrival of these inflows the country's total foreign exchange reserves are likely to cross $ 27 billion mark for the first time in history.
As per estimates, after accumulating IMF inflows the country's total liquid foreign exchange reserve would reach $ 27.3 billion mark, if no major external payment occurred. While, reserves held by the SBP may surge to the highest ever level of over $ 20 billion mark.
Pakistan's current account deficit is gradually increasing on the back of rising goods import bill due to pick-up in domestic activity, higher global commodity prices and import of Covid-19 vaccine. The country recorded a current account deficit of $ 773 million in July 2021 compared to a $ 583 million surplus in July 2020. As per SBP's expectations current account deficit would be 2-3 percent of GDP for FY22.
Analysts said that the IMF inflows will ease pressure on external account and improve Pakistan's capacity for import payments and external debt repayment. The rising foreign exchange reserves will also support the Pak rupee against the US dollar and other major currencies.
It may be mentioned here that the IMF board of governors had approved a general allocation of about Special Drawing Rights (SDR) 456 billion equivalent to $ 650 billion on August 2, 2021 to boost global liquidity of its member countries. This was the largest SDR allocation in the history of the IMF. The IMF believes that the SDR allocation will be beneficial for all member countries and will address their long-term global need for exchange reserves.
Copyright Business Recorder, 2021