IMF to give Pakistan $1.4bn in 'budgetary support' as it fights coronavirus

The International Monetary Fund plans on giving Pakistan $1.4 billion next week "to boost its foreign exchange reserves and get some budgetary support in the wake of the economic slowdown due to the coronavirus pandemic", Arab News reported on Wednesday.

According to the publication, the government had last month, requested the international lender to consider giving it "a low-cost, fast-disbursing loan under the fund’s Rapid Financing Instrument (RFI) to deal with the adverse economic impact of COVID-19".

“We have been working with the Pakistani authorities since the request was placed … This $1.4 billion disbursement is scheduled to happen next week,” Teresa Daban Sanchez, the IMF Resident Representative in Pakistan, told Arab News.

The global body's Rapid Financing Instrument (RFI) provides a boost in finances to IMF member countries in need of urgent balance of payments. The financial assistance is made without a full-fledged programme and given under circumstances such as commodity price shocks, natural disasters, conflict and post-conflict situations.

Sanchez said that the IMF is working with the finance ministry to ensure that Pakistan has enough financial resources "to navigate through this difficult time”.

The new loan would be in addition to the ongoing three-year Extended Fund Facility (EFF) worth $6 billion which Pakistan entered into last July.

“Pakistani authorities remain committed to the policies and reforms outlined under the EFF-supported program,” the IMF resident representative said.

According to Arab News: "The IMF has deferred approval of the second review of the $6 billion bailout programme which was supposed to pave the way for a disbursement of $450m this month."

“The EFF is still there. We’re working on that. But now the priority is to work on the rapid financing instrument and that’s why everybody is working on that,” Sanchez explained.

Last month, Prime Minister Imran Khan had announced a Rs1.2-trillion economic relief package as the number of confirmed cases sharply rose in the country. The package was subsequently accorded approval by the cabinet on March 31.

Additionally, the World Bank has approved a $1 billion loan and the Asian Development Bank has approved $1.5 billion in aid for Pakistan.