SBP says it has received proceeds of $1.16bn after IMF board approval

The State Bank of Pakistan (SBP) said on Wednesday that it has received proceeds of $1.16 billion from the International Monetary Fund (IMF) after the global lender approved the revival of the Extended Fund Facility (EFF) for Pakistan.

In a Twitter post, the central bank said: "Today, SBP has received proceeds of USD 1.16 billion (equivalent of SDR 894 million) after the IMF Executive Board completed the combined seventh and Eight review under the Extended Fund Facility (EFF) for Pakistan."

It further said that the inflow of funds will help improve SBP’s foreign exchange reserves and will also "facilitate the realization of other planned inflows from multilateral and bilateral sources."

Earlier this week, Finance Minister Miftah Ismail announced that the IMF had approved the revival of the Extended Fund Facility (EFF) for Pakistan, paving the way for an inflow of $1.17 billion.

"We should now be getting the 7th & 8th tranche of $1.17 billion. I want to thank Prime Minister Shehbaz Sharif for taking so many tough decisions and saving Pakistan from default. I congratulate the nation," he said on Twitter.

Background

In July, IMF reached the staff-level agreement (SLA) with Pakistan authorities for the conclusion of the combined seventh and eighth reviews of the EFF, with the agreement subject to the approval of the Executive Board.

On August 2, IMF said that Pakistan met all prior actions agreed with the Fund. The statement came after the government increased the petroleum development levy (PDL) on petrol to Rs20 per litre and on high-speed diesel to Rs10.

The IMF funding, along with other financing, is crucial for Pakistan which is desperately seeking dollar inflows in the face of falling foreign exchange reserves. The decline in reserves has also hurt the currency, which saw its worst month in over 50 years in July.

The funding comes after Pakistan secured financing that the IMF required it to first arrange before considering a bailout deal worked out between the lender's staff and the country.

These assurances have come from Saudi Arabia, the Qatar Investment Authority, and the UAE who have announced investing in different sectors of Pakistan's economy.