On Monday, the International Monetary (IMF) agreed to revive the Extended Fund Facility (EFF) programme for Pakistan after completing the combined seventh and eighth reviews under the EFF for Pakistan, allowing the authorities to draw the equivalent of SDR 894 million (about US$1.1 billion).
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Finance Minister Miftah Ismail shared the news on his Twitter account, “Alhamdolillah the IMF Board has approved the revival of our EFF program. 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.”
Alhamdolillah the IMF Board has approved the revival of our EFF program. We should now be getting the 7th & 8th tranche of $1.17 billion. I want to thank the Prime Minister @CMShehbaz for taking so many tough decisions and saving Pakistan from default. I congratulate the nation.
— Miftah Ismail (@MiftahIsmail) August 29, 2022
The global lender issued Press Release No. 19/264 for announcing the development which read, “the Board’s decision allows for an immediate disbursement of SDR 894 million (about US$1.1 billion), bringing total purchases for budget support under the arrangement to about US$3.9 billion.”
The immediate priority is to continue the steadfast implementation of the recently approved budget for FY23, adherence to a market-determined exchange rate, and pursuit of a proactive and prudent monetary policy. It is also important to continue to expand social safety to protect the most vulnerable and accelerate structural reforms including to improve the performance of state-owned enterprises (SOEs) and governance.
Pakistan is at a challenging economic juncture. A difficult external environment combined with procyclical domestic policies fueled domestic demand to unsustainable levels. The resultant economic overheating led to large fiscal and external deficits in FY22, contributed to rising inflation, and eroded reserve buffers. The program seeks to address domestic and external imbalances and ensure fiscal discipline and debt sustainability while protecting social spending, safeguarding monetary and financial stability, and maintaining a market-determined exchange rate and rebuilding external buffers.
The Executive Board also approved the authorities’ request for waivers of nonobservance of performance criteria.