The State Bank of Pakistan (SBP) has received $2.75 billion from the International Monetary Fund (IMF), as part of Special Drawing Rights (SDR) allocation announced by the fund recently, the central bank confirmed through a tweet here Tuesday.
“#SBP has received US$ 2.75 billion from the IMF, as part of SDR allocation announced by IMF recently,” the central bank tweeted Tuesday morning.
#SBP has received US$ 2.75 billion from the IMF, as part of SDR allocation announced by IMF recently.
— SBP (@StateBank_Pak) August 24, 2021
This was the second time that IMF allocated funds for its member countries amid Covid-19 outbreak to cope up with the contagious disease. In April 2020, it disbursed $1.4 billion to Pakistan.
It is pertinent to mention here that Pakistan was due to receive the amount on August 23 from IMF’s general allocations of $650 billion that had been approved to boost global liquidity amid the coronavirus pandemic across the globe.
The enhanced funding, approved on Monday, aims to mitigate the crisis caused by the Covid-19 pandemic, which has already killed 4.44 million people and infected more than 212 million across the globe.
“The largest allocation in history … is a significant shot in the arm for the world,” IMF Managing Director Kristalina Georgieva said in a statement issued in Washington. “If used wisely, (this is) a unique opportunity to combat this unprecedented crisis.”
She said this SDR allocation was a critical component of the IMF’s broader effort to support countries through the pandemic, which included: $117 billion in new financing for 85 countries; debt service relief for 29 low-income countries; and policy advice and capacity development support to over 175 countries to help secure a strong and more sustainable recovery.
The total amount of $650 billion will be distributed among member states in accordance with their quota of the SDRs – the fund’s unit of exchange backed by dollars, euros, yen, sterling and yuan – whereas the break up can bring about $2.7 billion to Pakistan; the latest receipt is expected to lift the country’s foreign currency reserves to an all-time high of $20.4 billion.
To spend their SDRs, countries would first have to exchange them for underlying hard currencies, requiring them to find a willing exchange partner country.
Countries can use the SDR allocation to support their economies and step up their fight against the coronavirus crisis, but should not use the fiscal space to delay needed economic reforms or debt restructuring, the IMF said in separate guidance document.
Another possibility, she said, could be to channel SDRs to support lending by multilateral development banks. The IMF’s last SDR distribution came in 2009 when member countries received $250 billion in SDR reserves to help ease the global financial crisis.
India, which initially opposed the idea of general allocation of SDR but softened its stand at the last minute, will receive $17.94bn worth of additional SDR.
