KARACHI: Pakistan will seek to factor the economic impact of the coronavirus crisis into the targets of its International Money Fund (IMF) bailout program, the country's de facto finance minister told Arab News in an exclusive interview on Monday.
While the government is not planning to renegotiate the $6 billion IMF Extended Fund Facility (EFF) arrangement, as it "is on track" and "there is no need to renegotiate," according to the prime minister’s special adviser on finance, Dr Abdul Hafeez Shaikh, the new situation needs to be taken into account.
"The changing ground realities due to the coronavirus COVID-19 crisis need to be factored in with EFF program targets," he said.
Shaikh expressed confidence that the EFF "will not be derailed" and the government's reforms will continue as the country emerges from the health crisis. He added that the latest IMF review of the bailout program was successfully concluded with a staff-level agreement in February.
Pakistan availed the $6 billion bailout program last year to stabilize the wobbling economy suffering from balance of payment crisis. Under the scheme, the IMF has released $1.44 billion since July 2019.
As the South Asian country is struggling with the pandemic, the IMF has approved a separate program to support its response, the Rapid Financing Instrument (RFI).
"The IMF's board approved a $1.4 billion RFI for Pakistan in April 2020," Shaikh said, adding that to address the economic impacts of the coronavirus, the country is working closely not only with the IMF, but also other multilateral development partners.
"Similarly, the World Bank and Asian Development Bank have committed $4.6 billion in emergency assistance to Pakistan to deal with the COVID-19 crisis," he said.
Significant relief for the country's budget came with a decision of the Group of 20 major economies in mid-April on a coordinated approach for a suspension of debt service payments for the world's poorest countries to provide stimulus to the global economy. Pakistan is going save some $1.8 billion, which will be used for welfare programs, Shaikh said.
The initiative started on May 1 and will run through the end of the year.
"Pakistan will save $1.8 billion as a result of the G-20 initiative. The savings from the G-20 debt relief will be utilized for the welfare of the people. The government is scaling up emergency cash support to the most vulnerable households to mitigate the impact of the COVID-19 crisis. We have scaled up social safety nets under the prime minister's Ehsaas program to 16 million households, from 5 million last year," he said.
Pakistan provides assistance of Rs12,000 to the most vulnerable members of society affected by COVID-19 business shutdowns.