ISLAMABAD: The International Monetary Fund’s (IMF) Executive Board has given the green light for a $1.1 billion loan to Pakistan, marking the final installment of the $3 billion Stand-By Arrangement (SBA), The Ministry of Finance sources said.

They indicated that an official statement from the IMF regarding this approval is imminent, and Pakistan is expected to receive the loan disbursement within the current week.

This financing constitutes the third and last segment of the $3 billion Stand-By Arrangement (SBA) with the IMF, which Pakistan secured last summer to prevent a sovereign default and which concludes this month.

The final tranche’s approval followed discussions during today’s IMF Executive Board meeting in Washington regarding Pakistan’s request for fund release. So far, the global lender has disbursed $1.9 billion under the agreement.

This development comes a day after Prime Minister Shehbaz Sharif’s meeting with IMF Managing Director Kristalina Georgieva in Riyadh.

During their first meeting since his re-election, PM Shehbaz discussed the prospect of Pakistan entering into another IMF program.

Pakistan aims to secure a new long-term Extended Fund Facility (EFF) after the current $3 billion Stand-By Arrangement (SBA) expires this month.

The country has formally requested the IMF for a subsequent bailout package ranging between $6 to $8 billion under the EFF, with the potential for augmentation through climate financing.

However, the precise size and duration of the program will only be determined after consensus is reached on its major contours in May 2024.

Pakistan has expressed its interest and requested the dispatch of an IMF review mission in May 2024 to finalize details of the next bailout package, which is anticipated to span three years under the EFF program.

The Finance Minister has indicated that Islamabad could reach a staff-level agreement on the new program by early July.

The nation seeks this loan over at least three years to achieve macroeconomic stability and implement overdue structural reforms. However, specific details about the size of the program have not been disclosed.

If secured, this would mark Pakistan’s 24th IMF bailout. The $350 billion economy faces a persistent balance of payments crisis, with approximately $24 billion due in debt and interest payments over the next fiscal year—triple its central bank’s foreign currency reserves.

The Ministry of Finance anticipates a 2.6% growth rate for the fiscal year ending in June, with average inflation projected to be 24%, down from 29.2% the previous fiscal year.