Pakistan receives third tranche of IMF loan

Govt raises $2.5bn by selling Eurobonds 

ISLAMABAD: The State Bank of Pakistan (SBP) on Tuesday announced that it had received the third tranche of International Monetary Fund’s (IMF) $6 billion dollar loan.

In a tweet, the central bank said, “#SBP has received IMF tranche of US$498.7 million (equivalent to SDR 350 million) under the Extended Fund Facility.”

Following stringent measures on Pakistan’s end, the International Monetary Fund (IMF) on March 25 agreed to release the third loan tranche of around $500 million for Pakistan while approving four pending reviews of the country’s economy.

Reportedly, the decision to revive the $6 billion programme came following government’s decisions to jack up electricity prices, impose additional taxes and grant significant autonomy to the central bank.

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According to a report, last month’s staff level agreement was endorsed by the international creditor’s Executive Board, which paved the way for the release of the next loan tranche.

It is worth mentioning here that IMF has already given $1.45 billion in the previous two tranches out of the $6 billion agreed between the international creditor and Pakistan.

Citing sources, a report stated that Pakistan would be in a difficult position this year as it would impose taxes amounting to Rs700 billion and reduce expenditures in the budget for the next fiscal year.

Last month, as both sides reached the staff level agreement, a joint statement was issued to mark the occasion, wherein the Fund said that “the package strikes an appropriate balance between supporting the economy, ensuring debt sustainability and advancing structural reform”.

“Pending approval of the Executive Board, the reviews’ completion would release around $500 million,” it added.

According to financial analysts, the hold-up was due to questions around fiscal and revenue reforms.

Meanwhile, Pakistan on Tuesday raised 2.5 billion dollar worth Eurobonds against the attracted amount of $5.3bn from investors in order to boost the foreign currency reserves. 

According to details, $1billion were raised at the rate of 6pc for five years and $1bn at a rate of 7.37pc for ten years, in addition to selling $500 million Eurobonds at 8.87pc rate of return for the period of 30 years. 

The government has mandated institutions like Standard Chartered Bank, Credit Suisse, JP Morgan, NBD Capital Deutsche Bank to act as book runner and advisors to help float bonds.

The total liquid foreign reserves held by the country stood at $20,434.6m on March 19. 

 

 

 

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