The IMF Executive Board has finalized the second review under the Standby Arrangement (SBA) for Pakistan, enabling the immediate disbursement of SDR 828 million (approximately $1.1 billion). This brings the total disbursements under the arrangement to SDR 2.250 billion (about $3 billion).
The successful completion of the second and final review signifies the authorities’ intensified policy efforts under the SBA, contributing to economic stabilization and modest growth recovery. To transition Pakistan towards a robust and sustainable recovery, sustained policy and reform endeavors are imperative. These include strict adherence to fiscal targets, safeguarding vulnerable segments, adoption of a market-determined exchange rate to absorb external shocks, and the expansion of structural reforms to bolster inclusive growth.
The economic reform program supported by the IMF’s SBA, spanning nine months, has served as a vital policy anchor, addressing both domestic and external imbalances. The program focused on essential fiscal adjustments, maintenance of debt sustainability, protection of critical social spending, buffering external shocks, disinflation, and advancing structural reforms, particularly in the energy sector, state-owned enterprise (SOE) governance, and climate resilience.
Macroeconomic indicators have shown improvement throughout the program duration, with an expected growth of 2 percent in FY24. Fiscal resilience has strengthened, evidenced by a primary surplus of 1.8 percent of GDP achieved in the first half of fiscal year 2024, surpassing projections.
Despite persisting inflationary pressures, a downward trend is observed, with a projected decrease to around 20 percent by end-June. The continuation of prudent monetary policies is expected to align inflation with the State Bank of Pakistan’s target, while fostering sustained economic growth. Gross reserves have notably increased to around $8 billion, reflecting progress and resilience in the face of challenges.
Antoinette Sayeh, Deputy Managing Director and Chair, emphasized the significance of Pakistan’s steadfast policy efforts in restoring economic stability under the 2023 Standby Arrangement. She stressed the importance of capitalizing on achieved stability to pursue sound macroeconomic policies and structural reforms for sustained, inclusive, and resilient growth. Continued external support remains vital in this endeavor.
Key areas for future focus include revenue mobilization, fiscal sustainability, energy sector reforms, monetary policy alignment, FX market functionality, financial sector stability, and acceleration of structural reforms to promote long-term inclusive growth and job creation.
