Global lender okays to increase loan size to $7b
The International Monetary Fund’s executive board has approved the revival of Pakistan’s Extended Fund Facility programme after which the country will receive the 7th and 8th tranche of $1.17 billion, Finance Minister Miftah Ismail said on Monday.
“Alhamdolillah the IMF Board has approved the revival of our EFF programme. We should now be getting the 7th & 8th tranche of $1. 17 billion,” he tweeted.
The minister went on to congratulate the nation and thanked Prime Minister Shehbaz Sharif for “taking tough decisions” and “saving Pakistan from default”.
The IMF will now immediately disburse about $1.2 billion to Pakistan and may provide up to $4 billion over the remainder of the current fiscal year, which began on July 1.
The global lender also approved to increase the loan size to around $7 billion and extended it till June 2023.
All executive directors supported Pakistan’s request for loan approval and extension except India that abstained from the voting.
The board members raised questions over the reversal of the commitments that Pakistan had given in February this year but acknowledged the politically difficult steps that Pakistan took to revive the programme.
The Board has approved completion of the combined 7th and 8th review under the EFF and release of the tranche of SDR 894 million or $1.16 billion, according to the Pakistani officials.
The Board has also approved the extension of the programme through end-June 2023, and augmentation of access by SDR 720 million or $930 million.
With the augmentation, the programme size has been increased to the SDR4.988 billion, which is equivalent to 245.6 per cent of quota of Pakistan.
The IMF Board expressed condolences and sympathies with Pakistani authorities over the tragic loss of lives and livelihoods caused by the floods in the country, according to the sources.
The board appreciated that Pakistani government made efforts to put the programme back on track and renewed commitment to programme policies and targets.
As per the commitment, Pakistan will have to show primary budget surplus target of Rs153 billion or 0.2% of the GDP, until it is mutually revised in consultation with the IMF staff.
The sources said that the executive directors representing the UAE, Saudi Arabia and Qatar also gave assurances to provide additional financing to Pakistan, as agreed between Islamabad and the IMF staff.
The previous government of the Pakistan Tehreek-e-Insaf had signed the 39-month EFF in July 2019 aimed at avoiding default on foreign repayment obligations.
However, the country remained in turmoil and despite remaining in the IMF programme, its foreign exchange reserves remained thin amid heightened external debt-related vulnerabilities.