IMF approves $1.386 bn funding for Pakistan

WASHINGTON: In a move to fight the novel coronavirus, the International Monetary Fund (IMF) has approved a $1.386 billion funding for Pakistan, ARY News reported on Friday.

According to the declaration, the IMF approved the disbursement of $1.386 billion under the Rapid Financing Instrument in a meeting of its executive board members in Washington DC.

Following the Executive Board discussion, Mr. Geoffrey Okamoto, First Deputy Managing Director and Acting Chair, said in his statement that the outbreak of coronavirus is having a significant impact on the Pakistani economy.

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

“In this context of heightened uncertainty, IMF emergency financing under the Rapid Financing Instrument provides strong support to the authorities’ emergency policy response, preserving fiscal space for essential health spending, shoring up confidence, and catalyzing additional donor support.”

Mr Geoffrey further said in his statement that 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. 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.

“Expeditious donor support is needed to close the remaining balance of payments gap and ease the adjustment burden.”

Last week, Prime Minister Imran Khan had called for a ‘Global Initiative on Debt Relief’ for developing countries amid coronavirus crisis in order to ‘promote coordinated health and economic response.’