STAND-BY
ARRANGEMENT - ECONOMY
News:
IMF approves immediate
disbursal of USD 1.1 billion loan tranche to Pakistan
What's in the news?
●
As part of the bailout package backed by
the IMF's Stand-By Arrangement (SBA), the International Monetary Fund has
authorized an immediate disbursement of USD 1.1 billion to Pakistan.
IMF's Stand-By Arrangement:
●
The Stand-By Arrangement (SBA) is designed
to offer short-term financial aid to
countries grappling with balance of payments challenges.
●
It has historically been the preferred
lending mechanism for both advanced and emerging market economies.
Eligibility:
●
It extends to all member nations facing actual or potential external financing
difficulties.
●
While it is predominantly utilized by
advanced and emerging market economies, low-income countries occasionally
access the SBA alongside the Standby
Credit Facility (SCF).
Features:
●
Conditionality
is a central feature of the SBA, requiring recipient countries to address the
underlying issues that prompted their request for financial support.
●
Disbursements
are contingent upon meeting specified quantitative performance criteria.
●
The progress in implementing essential structural reforms is
evaluated comprehensively additionally, including through predefined
benchmarks.
Duration:
●
The duration of assistance under the SBA
is flexible, typically spanning a period
of 12 to 24 months, with a maximum extension of 36 months.
Further Reference - IMF