IMF Executive Board has completed delayed reviews of Pakistan’s $6 billion loan program and has decided to release $500 million disbursement to Pakistan for budget support, reported The International Monetary Fund on Wednesday.
“The Pakistani authorities have continued to make satisfactory progress under the Fund-supported program, which has been an important policy anchor during an unprecedented period,” IMF Deputy Managing Director Antoinette Sayeh said in a statement.
The approval revives the $6 billion IMF programme after it remained on hold for a year. The negotiations for the second tranche of the loan program resumed after the government agreed to meet the requirements of the global lender between February and May this year.
After reviewing #Pakistan’s reform program supported by the IMF Extended Fund Facility, the Fund’s Executive Board approved the immediate disbursement of about US$500 million for budget support. https://t.co/WFaSy51UYv
— IMF (@IMFNews) March 24, 2021
The Pakistani authorities remain committed to ambitious policy actions and structural reforms to strengthen economic resilience, advance sustainable growth, and achieve the EFF’s medium-term objectives, read a statement issued by the global lender.
The latest payment brought total disbursements under the Extended Fund Facility to $2 billion since the program was first approved in July 2019, reported the IMF in a statement. Out of the $6bn, the IMF has already released $1.45bn in two tranches.
The approval came after Islamabad agreed to take some stringent measures to stabilize the economy. These included a hike in electricity bills, imposition of Rs140 billion taxes and agreeing to grant unprecedented autonomy for the central bank. In April 2020, the agreement had come to a standstill when Islamabad failed to announce a mini-budget for readjusting the economy.
“While the COVID-19 pandemic continues to pose challenges, the authorities’ policies have been critical in supporting the economy and saving lives and livelihoods,” the IMF said appreciating Pakistan’s efforts to formulate effective fiscal and monetary policies in the wake of COVID19 to keep the economy on track.
Last year, State Bank of Pakistan (SBP) Governor Raza Baqir had said that Pakistan was negotiating with IMF to put the fiscal program back on track.
Besides appreciating SBP’s policies, IMF had said, “The authorities are moving steadfastly on a number of other important reforms, including on strengthening regulatory agencies’ legal frameworks (NEPRA and OGRA Acts), consolidating SBP’s autonomy (SBP Act), and improving state owned enterprises (SOE) management (SOE Law).
Pakistan and the IMF have been working to execute IMF-supported economic reforms, specifically tax collection aimed at stabilizing the economy and bridging the fiscal debt gap.