WASHINGTON: The Executive Board of the International Monetary Fund (IMF) on Wednesday approved a $7 billion Extended Fund Facility (EFF) for Pakistan, with the first tranche of $1.1 billion likely to be released before September 30, 2024.
The interest rate on the loan is less than 5 percent, Finance Ministry sources said, adding that the IMF is expected to disburse the second installment during this fiscal year.
Confirming the development, State Bank of Pakistan (SBP) Governor Jameel Ahmed said Islamabad would receive the first tranche of $1.10 billion and added that the country has complied with all the demands of the global lender.
In July this year, Pakistan and the IMF reached an agreement on the 37-month loan programme, which Prime Minister Shehbaz Sharif hopes will be the country's last.
The approval finally came after confirmation of $12 billion in bilateral loans from Saudi Arabia, China and the United Arab Emirates and $2 billion in external financing.
According to sources close to the country, Pakistan owes $5 billion to Saudi Arabia in the form of cash deposits. It is worth noting that Pakistan also holds $4 billion in deposits from China and $3 billion from the United Arab Emirates.
Pakistan was required to secure $2 billion in external financing from bilateral and commercial lenders as a prerequisite for IMF board approval.
The global lender later identified an external financing gap of $2-$2.5 billion and confirmation was obtained from the kingdom in the form of a Saudi oil facility as well as a $400 million ITFC facility from the IsDB and the remainder from Standard Chartered Bank and other Middle East-based commercial banks, The News reported.
Islamabad has relied heavily on IMF programs for years, at times coming close to the brink of sovereign default and having to turn to countries such as the United Arab Emirates and Saudi Arabia for funding to meet external financing targets set by the IMF.
This is a developing story and will be updated with more details.
