ZAHEER ABBASI
ISLAMABAD: The Intern-ational Monetary Fund (IMF) Executive Board has approved $6 billion bailout package for Pakistan.
Director Communications Department IMF, Gerry Rice tweeted that IMF Executive Board has approved a three-year US $6 billion loan to support Pakistan’s economic plan, which aims to return sustainable growth to the country’s economy and improve the standards of living.
The country’s’ economic plan seeks to return sustainable growth to the economy by adopting reforms to foster stronger and more sustainable growth, he added.
Advisor to Prime Minister on Finance Dr Abdul Hafeez Shaikh also tweeted that IMF Board approved a $6 billion Extended Fund Facility (EFF) for Pakistan to support the economic reform programme.
“Our programme supports broad-based growth by reducing imbalances in the economy. Social spending has been strengthened to completely protect vulnerable segments,” he added.
Shaikh further stated that a structural reform agenda which includes improving public finances and reducing public debt through revenue reforms is key part of the programme.
This support bodes well for the country and is a testament of the government’s resolve for ensuring financial discipline and sound economic management, he added.
A press statement issued by the IMF’s Resident Representative Office stated that on July 3, 2019, the Executive Board of the IMF approved a 39-month extended arrangement under the EFF for Pakistan for an amount of SDR 4,268 million (about US $6 billion or 210 percent of quota) to support the authorities’ economic reform programme.
The EFF-supported programme will help Pakistan reduce economic vulnerabilities and generate sustainable and balanced growth focusing on: a decisive fiscal consolidation to reduce public debt and build resilience while expanding social spending; a flexible, market-determined exchange rate to restore competitiveness and rebuild official reserves; to eliminate quasi-fiscal losses in the energy sector; and to strengthen institutions and enhance transparency.
The Executive Board’s approval allows for an immediate disbursement of SDR 716 million (or about US $1 billion). The remaining amount will be phased over the duration of the programme, subject to four quarterly reviews and four semi-annual reviews.
AFP adds: The International Monetary Fund on Wednesday approved a $6 billion, three-year loan for Pakistan to try to right the South Asian nation’s economy.
With the IMF board’s approval, the fund released $1 billion to Pakistan immediately and said in a statement the program aims to “support the authorities’ economic reform program” and to help “reduce economic vulnerabilities and generate sustainable and balanced growth.”
The fund will review Pakistan’s performance quarterly over 39 months, phasing release of the additional aid over time.
The government agreed on the loan program last month and announced plans to slash civil expenditures and freeze military spending while promising to substantially raise revenues to stem a yawning fiscal deficit, and pledging to collect 5.5 trillion rupees ($36 billion) in taxes.
Discontent is simmering in the country following repeated devaluations of the rupee, soaring inflation, and increasing utility costs, while tax collection has been a long-standing challenge for authorities.
“Pakistan is facing a challenging economic environment, with lackluster growth, elevated inflation, high indebtedness and a weak external position,” the result of a “legacy” of uneven policies, IMF mission chief Ernesto Ramirez Rigo said in a statement in June.
The agreement includes a primary budget deficit target of 0.6 percent of GDP — excluding debt service costs.
