## IMF Executive Board Approves US$3 billion Stand-By Arrangement for Pakistan

_IMF News, July 12, 2023_

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**Canonical URL:** [IMF Executive Board Approves US$3 billion Stand-By Arrangement for Pakistan](https://www.imf.org/en/news/articles/2023/07/12/pr23261-pakistan-imf-exec-board-approves-us3bil-sba)

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## Bibliographic details
- Published: July 12, 2023

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### Program approval and financing
- Executive Board approved a 9-month Stand-By Arrangement (SBA) for Pakistan for an amount of SDR2,250 million (about $3 billion, or 111 percent of quota).
- The Fund’s immediate disbursement will be SDR894 million (or about US$1.2 billion).
- The remaining amount will be phased over the program's duration, subject to two quarterly reviews.

### Economic context and program objectives
- Context:
  - A difficult external environment, devastating floods, and policy missteps led to large fiscal and external deficits, rising inflation, and eroded reserve buffers in FY23.
- Program aims:
  - Support immediate efforts to stabilize the economy and guard against shocks while creating space for social and development spending.
  - Provide a policy anchor for addressing domestic and external imbalances and a framework for financial support from multilateral and bilateral partners.

### Key policy measures and conditionality
- Fiscal policy:
  - Implementation of the FY24 budget to facilitate Pakistan’s needed fiscal adjustment and ensure debt sustainability, while protecting critical social spending.
  - The FY24 budget targets a modest primary surplus; anticipated improvement in tax revenues is critical.
  - Maintain discipline over non-critical primary expenditure.
  - Strengthen energy sector viability by aligning tariffs with costs, reforming the sector’s cost base, and better-targeting power subsidies.
  - Enhance efforts to expand the tax base and improve public financial management, including in the delivery of quality infrastructure, to increase progressivity and efficiency.
- Monetary and exchange rate policy:
  - Return to a market-determined exchange rate and proper FX market functioning to absorb external shocks and eliminate FX shortages.
  - An appropriately tight monetary policy aimed at disinflation; continuation of a tight, proactive, and data-driven monetary policy is warranted.
  - Close oversight of the banking system and decisive action to address undercapitalized financial institutions to support financial stability.
- Structural reforms:
  - Further progress on structural reforms, particularly regarding energy sector viability, SOE governance, climate resilience, safety nets, and the business environment to promote job creation and inclusive growth.

### Managing risks and implementation
- Steadfast policy implementation is critical for the success of the program; this requires greater fiscal discipline, a market-determined exchange rate, and progress on reforms related to the energy sector, climate resilience, and the business climate.
- Program disbursements are conditional on quarterly reviews to assess implementation and progress.

### Selected economic indicators, FY2022–FY2024 (as presented)
- Population: 231.6 million (2022/23)
- Per capita GDP: US$1,642 (FY2022)
- Quota: SDR 2,031 million
- Poverty rate: 21.9 percent
- Main exports: Textiles (US$19.3 billion, FY2022) (national line; FY2019)
- Key export markets: European Union, United States, UAE

- Output and prices (% change)
  - Real GDP at factor cost: 6.1 (FY2022), -0.5 (FY2023), 2.5 (FY2024 Proj.)
- Employment (%)
  - Unemployment rate: 6.2 (FY2022), 8.5 (FY2023), 8.0 (FY2024)
- Prices (%)
  - Consumer prices, period average: 12.1 (FY2022), 29.6 (FY2023), 25.9 (FY2024)
  - Consumer prices, end of period: 21.3 (FY2022), 34.0 (FY2023), 16.2 (FY2024)

- General government finances (% GDP)
  - Revenue and grants: 11.4 (FY2022), 12.3 (FY2023)
  - Expenditure: 20.0 (FY2022), 18.9 (FY2023), 19.8 (FY2024)
  - Budget balance, including grants: -7.8 (FY2022), -7.6 (FY2023), -7.5 (FY2024)
  - Budget balance, excluding grants: -7.9 (FY2022)
  - Primary balance, excluding grants: -3.1 (FY2022), -1.0 (FY2023), 0.4 (FY2024)
  - Underlying primary balance (excluding grants) 2/: -2.3 (FY2022), -0.8 (FY2023)
  - Total general government debt excl. IMF obligations: 74.0 (FY2022), 74.9 (FY2023), 68.4 (FY2024)
  - External general government debt: 27.4 (FY2022), 31.1 (FY2023), 28.4 (FY2024)
  - Domestic general government debt: 46.6 (FY2022), 43.8 (FY2023), 40.0 (FY2024)
  - General government debt incl. IMF obligations: 76.1 (FY2022), 77.4 (FY2023), 70.9 (FY2024)
  - General government and government guaranteed debt incl. IMF: 80.6 (FY2022), 81.8 (FY2023)

- Monetary and credit (% change, unless otherwise indicated)
  - Broad money: 13.6 (FY2022), 13.3 (FY2023), 14.5 (FY2024)
  - Private credit: 21.1 (FY2022), 1.0 (FY2023)
  - Six-month treasury bill rate (%) 3/: 12.6 (FY2022)

- Balance of Payments (% GDP, unless otherwise indicated)
  - Current account balance: -4.6 (FY2022), -1.2 (FY2023), -1.8 (FY2024)
  - Foreign direct investment: 0.5 (FY2022), 0.2 (FY2023)
  - Gross reserves (millions of U.S. dollars) 4/: 9,821 (FY2022), 4,056 (FY2023), 8,982 (FY2024)
  - Months of next year's imports of goods and services: 1.9 (FY2022), 0.7 (FY2023), 1.4 (FY2024)
  - Total external debt: 32.1 (FY2022), 36.4 (FY2023), 37.3 (FY2024)
- Exchange rate (% change)
  - Real effective exchange rate: -6.0 (FY2022)

- Notes included in source:
  - 1/ Fiscal year ends June 30.
  - 2/ Excludes one-off transactions, including asset sales. In FY 2022 it excludes IPPs related arrears clearance and COVID-19 spending.
  - 3/ Period average.
  - 4/ Excluding gold and foreign currency deposits of commercial banks held with the State Bank of Pakistan.

*Source: IMF press release "IMF Executive Board Approves US$3 billion Stand-By Arrangement for Pakistan", July 12, 2023.*

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## References

- [Pakistan and the IMF](http://www.imf.org/external/country/PAK/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Stand-By Arrangement](https://www.imf.org/en/About/Factsheets/Sheets/2023/Stand-By-Arrangement-SBA)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2023/07/12/pr23261-pakistan-imf-exec-board-approves-us3bil-sba_