RIZWAN BHATTI
KARACHI: Pakistan Wednesday received inflows amounting to $ 1.39 billion from the International Monetary Fund (IMF) under the Rapid Financing Instrument to address the economic impact of the COVID-19 shock.
Last Thursday, the Executive Board of the IMF had approved the amount under the Rapid Financing Instrument (RFI) equivalent to SDR 1,015.5 million (US$ 1.386 billion, 50 percent of the quota) to meet the urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic.
The approved amount was released and accordingly transferred into the State Bank of Pakistan (SBP) account Wednesday. The State Bank has also confirmed that it has received inflows from IMF. “SBP has received $1.39 billion under the Rapid Financing Instrument by the IMF”, SBP said on its tweeter handle.
These inflows will not only help to build the depleting foreign exchange reserves of the country but also further improve the Pakistan’s balance of payment. Pakistan’s total liquid foreign exchange reserves were sharply declined by $1.5 billion to $17.388 billion during March due to massive outflow of hot money.
The disbarment of $1.39 billion financing will reflect in the next foreign exchange report to be issued on April 30, 2020. However, as per estimates, with arrival of these inflows Pakistan’s total liquid foreign exchange reserves likely to cross $18 billion mark.
The recent outbreak of Covid-19 has significantly the economies worldwide and the Pakistan’s economy is also facing multiple challenges. The SBP has already projected that Pakistan’s GDP growth will be negative 1.5 percent by end of this fiscal year.
In this context of uncertainty, IMF has approved emergency financing under the Rapid Financing Instrument to provide a strong support to Pakistan for emergency policy response and preserving fiscal space for essential health spending.
IMF, it statement issued on April 16, has also endorsed that in response to COVID-19, the government of Pakistan has taken swift action to halt the community spread of the virus and introduced an economic stimulus package aimed at accommodating the spending needed to tackle the health emergency and supporting economic activity.
According to IMF will remains closely engaged with the Pakistani authorities and as the impact of the COVID-19 shock subsides will resume discussions as part of the current EFF.
