SBP Receive US 1.2 Billon Dollar from IMF as the Second Installment

The State Bank of Pakistan has received the second installment of the EFF program and the new IMF program, which depends on climate finance. Now Pakistan is officially under two IMF programs, which will be monitored by the IMF, and it will ease the pressure on Pakistan regarding debt payment. Pakistan's foreign exchange reserve has fallen to US $10.2 billion, which is the lowest since early last year, which could have led to devaluation again to sustain the imports and to decrease. However, timely implementation of IMF targets and cleverly going for the new IMF program decreased the chances of instability, which could have caused another major devaluation, and forex holders could have taken advantage of this situation. 

There is no doubt that Pakistan has to implement reforms to improve its exports and lessen its dependency on imports. It has been the problem in Pakistan for more than a decade that whenever Pakistan moves towards growth from stability, Pakistan's current account deficit increases to double digits, which can not be covered by other external inflows like foreign direct investment. Additionally, this is the reason why Pakistan has to again and again approach the IMF for a bailout and pay its external debts on time. This is why it is impossible for Pakistan to move towards growth again, because again it is based on imports, which will again raise the current account deficit. 

Pakistan has to focus on industrial growth, reforms, and education. Pakistan has to increase its exports to such an extent that it can cover the export figures without the help of remittance inflows; then it will be easy for Pakistan to pay its external debts as well and without the help of the IMF. Pakistan cannot afford growth at the moment due to it still having to address the elephant in the room, which is LSM growth. Large-scale manufacturing has been negative since 2022, and it has improved compared to last year but not to the level of 2021. It is hoped that the government will focus on reforms, IT sectors, and easing taxes.