KARACHI: Pakistan is expected to receive a $1 billion loan disbursement from the IMF today, Tuesday, as part of a larger $7 billion bailout agreement, Finance Minister Muhammad Aurangzeb has said.
The IMF last Friday approved a fresh $1.4 billion loan to Pakistan under its climate resilience fund and approved the first review of its $7 billion program, freeing about $1 billion in cash. The review approval brings disbursements to $2 billion within the $7 billion program.
In a statement released after a virtual meeting on Monday between Aurangzeb and Johana Chua, head of emerging markets economies for Citigroup Global Markets, the finance ministry confirmed that Pakistan would receive the latest IMF tranche on Tuesday.
“The Minister also apprised the participants of the successful conclusion of a Staff Level Agreement with the International Monetary Fund (IMF) under the Extended Fund Facility (EFF), with the next tranche expected to be received tomorrow [Tuesday],” the statement said.
“He further mentioned the approval of the Resilience and Sustainability Facility (RSF), calling it a milestone achievement for Pakistan.”
The loan disbursement comes amid a military standoff with arch-rival India, though Aurangzeb told Reuters in an interview on Monday the conflict would not have a large fiscal impact on Pakistan.
The finance minister described the conflict as a “short duration escalation” with minimal fiscal impact, stating it can be “accommodated within the fiscal space which is available to the government of Pakistan.”
When questioned about potential increased military spending in the upcoming budget, Aurangzeb deferred comment, saying it was premature to discuss specific plans. However, he said: “Whatever we need to do in terms of ensuring that our defense requirements are met will be met.”
Aurangzeb said he expects the Indus Water Treaty, which India unilaterally suspended, to be reinstated and rolled back to where it was.
He said there is not going to be any immediate impact from India’s suspension and Pakistan does not “even want to consider any scenario which does not take into account the reinstatement of this treaty.”
Tensions between India and Pakistan began mounting after the April 22 attack in Indian-administered Kashmir on Hindu tourists that killed 26 people, sparking the worst clashes between the nuclear-armed neighbors in more than two decades.
On Saturday, a ceasefire in the Himalayan region was announced by US President Donald Trump, following four days of fighting and diplomacy and pressure from Washington.
Pakistan’s federal budget for the next fiscal year, starting July, will be finalized within the next four weeks, with scheduled budget talks with the IMF to take place from May 14-23, according to the finance ministry.
With inputs from Reuters
