The International Monetary Fund (IMF), on Wednesday, approved a loan of $6 billion for Pakistan in a 39-month extended arrangement to support the country’s economic reform program.
After approval of the loan under the Extended Fund Facility (EFF) by the Executive Board of IMF, Pakistan is now eligible to immediately receive the first tranche of $1 billion, an IMF statement said.
The board’s approval allows for an immediate disbursement of $1 billion, an IMF statement said. The remaining amount will be phased over the duration of the program, subject to four quarterly reviews and four semi-annual reviews.
The fund will review the performance of Pakistan quarterly over the next 39 months.
The EFF-supported program would help Pakistan reduce economic vulnerabilities and generate sustainable and balanced growth.
The statement added that the program would focus on a decisive fiscal consolidation to reduce public debt and build resilience while expanding social spending.
It will also try to ensure a flexible, market-determined exchange rate to restore competitiveness and rebuild official reserves besides eliminating quasi-fiscal losses in the energy sector, strengthening institutions and enhancing transparency.
Meanwhile, Advisor to Prime Minister on Finance Dr. Abdul Hafeez Shaikh said the IMF’s support bodes well for the country and is a testament to the government’s resolve for ensuring financial discipline and sound economic management.
Welcoming the IMF approval of $6 billion loans for Pakistan, Hafeez Shaikh said in a tweet that structural reform agenda which includes improving public finances and reducing public debt through revenue reforms is a key part of the program.
“Our program supports broad-based growth by reducing imbalances in the economy. Social spending has been strengthened to completely protect vulnerable segments”, the advisor added.
The Pakistani government, in its budget proposals for the next financial year, has already added a Rs. 357 billion loan from the IMF. An IMF team is set to visit Islamabad every three months to review the country’s economic indicators.
