IMF approves $500 million loan disbursement for Pakistan to help economy

The International Monetary Fund (IMF) has approved a half-billion disbursement for Pakistan to help the country's economy and save lives and livelihoods amid the pandemic

The International Monetary Fund (IMF) has approved a half-billion disbursement for Pakistan to help the country's economy and save lives and livelihoods amid the COVID-19 pandemic.

The Executive Board of the IMF on Wednesday completed the second through fifth reviews of the Extended Arrangement under the Extended Fund Facility (EFF) for Pakistan.

The Board's decision allows for an immediate disbursement of SDR 350 million (about USD 500 million), bringing total purchases for budget support under the arrangement to about USD 2 billion, the IMF said in a statement.

"The program aims to support Pakistan's policies to help the economy and save lives and livelihoods amid the still unfolding COVID-19 pandemic, ensure macroeconomic and debt sustainability, and advance structural reforms to lay the foundations for strong, job-rich, and long-lasting growth that benefits all Pakistanis," the Fund said.

Antoinette Sayeh, Deputy Managing Director and Acting Chair, IMF said further efforts to remove structural impediments will strengthen economic productivity, confidence, and private sector investment.

"These include measures to bolster the governance, transparency, and efficiency of the vast SOE sector; boost the business environment and job creation; and foster governance and strengthen the effectiveness of anti-corruption institutions. Also, completing the much-advanced action plan on AML/CFT is essential."

Even as Pakistan's foreign debt and liabilities continue to mount, its reliance on foreign commercial loans has been increasing at a rapid pace as the country obtained USD 3.110 billion through this head out of a total of USD 7.2 billion external loan inflows during the first eight months (July-February) period of the current fiscal year.

According to The News International, the foreign commercial loans of USD 3.11 billion and USD 1 billion from Chinese deposits helped the government to achieve the net transfer of dollar inflows in the current fiscal year.

With the combination of foreign commercial loans and safe deposits, Pakistan received over USD 4.1 billion that was over 50 per cent out of the total received foreign dollar inflows from creditors.

The news outlet reported that during July-February of the fiscal year 2020-21, the Imran Khan government has received USD 7.208 billion total external inflows from multiple financing sources, which are 59 per cent of annual budget estimates of USD 12.233 billion for the entire fiscal year 2020-21.