STOCK MARKET BSE NSE

COVID-19: IMF approves nearly USD 1.4 billion to Pakistan to meet balance of payment crisis

IMF's decision is in addition to the USD 6 billion bailout package that Islamabad signed with it in July last year to stave off a balance of payment crisis.

Published: 17th April 2020 01:23 PM  |   Last Updated: 17th April 2020 01:23 PM   |  A+A-

IMF

The International Monetary Fund logo (File photo| Reuters)

By PTI

WASHINGTON: The IMF has approved disbursement of USD 1.386 billion as a financial assistance to cash-strapped Pakistan to meet its urgent balance of payment needs stemming from the COVID-19 outbreak.

The International Monetary Fund's (IMF) decision comes at the request of Pakistan, which faces an urgent balance of payment crisis.

This is in addition to the USD 6 billion bailout package that Islamabad signed with the IMF in July last year to stave off a balance of payment crisis.

"The outbreak of COVID-19 is having a significant impact on the Pakistani economy," said Geoffrey Okamoto, the IMF's First Deputy Managing Director and Acting Chair.

The domestic containment measures coupled with the global downturn are severely affecting growth and straining external financing which has created an urgent balance of payments need, he said.

"As the crisis abates, the authorities' renewed commitment to the reforms in the existing Extended Fund Facility -- in particular those related to fiscal consolidation strategy, energy sector, governance, and remaining AML/CFT deficiencies -- will be crucial to entrench resilience, boost Pakistan's growth potential, and deliver broad based benefits for all Pakistanis," Okamoto said.

Expeditious donor support is needed to close the remaining balance of payments gap and ease the adjustment burden, he added.

Okamoto said that in response to the crisis, 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.

"Crucially, the authorities are increasing public health spending and strengthening social safety net programs to provide immediate relief to the most vulnerable," he said.

"Similarly, the State Bank of Pakistan has adopted a timely set of measures, including a lowering of the policy rate and new refinancing facilities, to support liquidity and credit conditions and safeguard financial stability.

In this context, the authorities' policies should be targeted and temporary," Okamoto said.

The cash-strapped Pakistan government has been implementing austerity measures to improve the country's finances.

In July last year, Pakistan registered a currency reserve of less than USD 8 billion -- enough to cover only 1.7 months of imports.

Pakistan has so far received billions in financial aid from friendly countries like China, Saudi Arabia and the UAE during the current fiscal year.

Stay up to date on all the latest World news with The New Indian Express App. Download now

Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp