In a relief to cash-strapped Pakistan, the International Monetary Fund (IMF) on Wednesday gave a final nod to a USD 3 billion stand-by arrangement for the country to support the government's efforts to stabilise the ailing economy.
The development came two weeks after the two sides reached a staff-level agreement over the stand-by arrangement.
"The Executive Board of the International Monetary Fund (IMF) approved a 9-month Stand-By Arrangement (SBA) for Pakistan for an amount of SDR2,250 million (about $3 billion, or 111 per cent of quota) to support the authorities' economic stabilisation programme, the global lender said in a statement.
Dawn newspaper reported that the approval allows for an immediate disbursement of USD 1.2 billion.
The remaining amount will be phased over the programme's duration, subject to two quarterly reviews, it added.
The global lender said that the programme would focus on the implementation of the FY24 budget to facilitate Pakistan's needed fiscal adjustment and ensure debt sustainability.
The development came after Pakistan received USD 2 billion from Saudi Arabia and USD 1 billion from the UAE as per conditions of the fund.
Pakistan has been struggling to get IMF support for its ailing economy.
It is believed that the new loan will improve the country's foreign exchange reserve and also open the door to multilateral loan agreements with institutions and countries.
"The approval of Stand-by Agreement of USD 3 billion by the IMF's Executive Board a little while ago is a major step forward in the government's efforts to stabilise the economy and achieve macroeconomic stability," Prime Minister Shehbaz Sharif tweeted.
"It bolsters Pakistan's economic position to overcome immediate- to medium-term economic challenges, giving the next government the fiscal space to chart the way forward," he said.
Pakistan's economy has been in a free fall mode for the last many years, bringing untold pressure on the poor masses in the form of unchecked inflation, making it almost impossible for a vast number of people to make ends meet.
Pakistan had been struggling to arrange enough foreign exchange to satisfy the IMF which refused to provide the remaining USD 2.5 billion out of a USD 6.5 billion loan programme which was signed in 2019 and expired on June 30 this year.