IMF has agreed to release $500 million for Pakistan as part of budget support program amid COVID-19
The International Monetary Fund (IMF) on Wednesday approved the third tranche of budget support worth US$500 million for Pakistan. As per a statement issued by the international agency, the decision was taken after the IMF Executive Board completed the four pending reviews of the Extended Arrangement under the Extended Fund Facility (EFF) for Pakistan.
With the latest disbursement of US$500 million, Pakistan’s total purchases for budget support have increased to $2 billion. As per reports, the IMF had earlier disbursed $1.45 billion in two tranches. The IMF Executive Board had approved a 39-month EFF arrangement for about $6 billion for Pakistan on July 3, 2019, with the aim of supporting the government’s policies to save the economy and livelihoods. Amid the pandemic circumstances, the program also aims to ensure macroeconomic and debt sustainability and facilitate structural reforms for boosting employment and growth in Pakistan.
In its review, the IMF noted that the Pakistani authorities have made satisfactory progress under the fund-supported program amid challenges posed by the COVID-19 pandemic.
“The Pakistani authorities remain committed to ambitious policy actions and structural reforms to strengthen economic resilience, advance sustainable growth, and achieve the economic reform program medium-term objectives,” the IMF said.
Antoinette Sayeh, Deputy Managing Director and Acting Chair, issued a statement, affirming that while COVID-19 has posed several challenges to Pakistan, the government policies have proved to be critical in supporting the economy and saving livelihoods from the repercussions of the pandemic. She noted that the Pakistani authorities have continued to enhance their reform agenda in key areas such as bolstering management of state-owned enterprises, reforming corporate taxation, consolidating central bank autonomy, and regulation in the power sector. Antoinette Sayeh also said that IMF’s efforts to remove structural impediments will boost economic productivity and private sector investment in the country.
“These include measures to bolster the governance, transparency, and efficiency of the vast state-owned-enterprises (SOE) sector; boost the business environment and job creation; and foster governance and strengthen the effectiveness of anti-corruption institutions,” she added. In February, the IMF Executive Board and the Pakistan government agreed on endorsing the staff-level agreement and facilitate the reviews of the program.