The Executive Board of the International Monetary Fund has approved the immediate disbursement of $700 million to economically embattled Pakistan after completing an initial review of its reform agenda on Thursday.This gives the countrys cash-strapped government a vital fiscal lifeline Funds to reduce balance of payments crisisThe newly released funds will bring total payouts under Pakistans $3 billion IMF bailout deal to $1.9 billion.The Boards approval allows for an immediate disbursement of SDR 528 million (around US$ 700 million), bringing the total disbursements under the SBA to US$ 1.9 billion, a report released by the Pakistan Finance Ministry, stated.The latest tranche provides urgent relief toward meeting external liabilities and averting a potential default as forex reserves sink to critical levels. Reforms and austerity measures advanceThe green signal from the IMF came after the staff-level agreement reached between the IMF and Pakistan on November 15, 2023, that emphasised the need to implement key reforms in the country.This approval comes in the middle of the persistent efforts of the caretaker Finance Minister Shamshad Akhtar and Army Chief General Asim Munir to revive Pakistans spiralling economy.Per the State Bank of Pakistan, Pakistan has successfully achieved all targets set under the IMF programme including energy subsidy cuts, let the rupee slide, and boosted taxes - difficult conditions that have squeezed households but unlocked international aid. Debt burden now over 63 trillion rupeesEven so, Pakistans total debt has climbed by a staggering 12.43 trillion rupees under the current and previous administrations, reaching 63.39 trillion rupees. Officials remain hopeful that with IMF support tied to ongoing reforms, the economic quagmire can be navigated.Pakistan walks a fiscal tightrope, balancing the need for economic reforms with a staggering debt burden. The current International Monetary Fund (IMF) program, a 3 billion USD lifeline, provides crucial support, but with only eight billion remaining undisbursed. The program ends in April 2024, pressure is mounting to achieve results. The IMF released its first tranche of USD 1.2 billion in July. IMF applauds progress, disburses further tranche:Officials at the Finance Ministry report positive progress, stating that Pakistan has met all IMF targets and anticipates securing the next tranche of around 700 million dollars.Strict adherence to the global bodys economic reform recommendations, including fiscal consolidation, energy sector reforms, and a market-determined exchange rate, has fueled optimism. Debt: A pressing challengeHowever, a dark cloud hangs over the celebrations – Pakistans debt burden. By November 2023, the total debt ballooned to a staggering 63,399 trillion Pakistani Rupees (PKR) in the financial year 2023-24.The country also witnessed a staggering 12.43 trillion PKR debt increase during the tenure of the PDM and the caretaker government.This translates to a domestic debt of 40.956 trillion PKR and an international debt of 22.434 trillion PKR. Navigating the Path ForwardThe IMF program offers breathing room, but tackling the debt crisis requires sustained efforts. Balancing fiscal prudence with essential social spending and attracting foreign investment through governance reforms will be crucial.As the program nears its end, all eyes are on Pakistans ability to turn IMF-backed progress into long-term economic stability.
