Pakistan to get $1.4bn loan next week to fight coronavirus — IMF

ISLAMABAD: Pakistan is going to get $1.4 billion from the International Monetary Fund (IMF) next week to boost its foreign exchange reserves and get some budgetary support in the wake of the economic slowdown due to the coronavirus pandemic.
The government requested the IMF last month for a low-cost, fast-disbursing loan under the fund’s Rapid Financing Instrument (RFI) to deal with the adverse economic impact of COVID-19.
“We have been working with the Pakistani authorities since the request was placed … This $1.4 billion disbursement is scheduled to happen next week,” Teresa Daban Sanchez, the IMF Resident Representative in Pakistan, told Arab News on Wednesday.
The RFI is used to provide financial assistance to IMF member countries facing an urgent balance of payments need without requiring them to put a full-fledged program in place. It can provide support to meet a broad range of urgent needs, including those arising from commodity price shocks, natural disasters, conflict and post-conflict situations.
Sanchez said the IMF was working with the Ministry of Finance to make sure that Pakistan had “enough resources to navigate through this difficult time.”
The $1.4 billion loan to Pakistan is additional to the country’s $6 billion bailout package that it signed with the IMF in July last year to stave off a balance of payments crisis. The IMF had granted the loan under its Extended Fund Facility (EFF) by imposing tough conditions including massive economic reforms and significant improvement in annual tax collection.
“Pakistani authorities remain committed to the policies and reforms outlined under the EFF-supported program,” the IMF resident representative said.
However, the IMF has deferred approval of the second review of the $6 billion bailout program which was supposed to pave the way for a disbursement of $450m this month.
“The EFF is still there. We’re working on that. But now the priority is to work on the rapid financing instrument and that’s why everybody is working on that,” Sanchez explained.
Pakistan has already announced a Rs1.2 trillion fiscal stimulus package to offset the adverse impacts of the COVID-19 pandemic on the country’s fragile economy. It has also approached multilateral donors for additional funds to fight the coronavirus pandemic and its economic implications.
The World Bank has approved $1 billion and the Asian Development Bank has approved $1.5 billion for Pakistan to keep its economy afloat.