IMF disburses $1 bn for Pakistan

WASHINGTON-Agence France-Presse

The IMF has approved a $1 billion loan disbursement for Pakistan after signaling approval with recent government reforms.

The money comes from an agreement that was approved in July 2019 for a $6 billion loan over a period of more than three years under the Washington-based crisis lender’s Extended Fund Facility.

However, only a third of the money has been sent out thus far, with the IMF holding back until Islamabad implements reforms it had committed to.

To secure the release of the latest tranche, the government submitted a new budget to the IMF last month, which includes ending tax exemptions on basic commodities and foodstuffs.

“The Pakistani economy has continued to recover despite the challenges from the COVID-19 pandemic, but imbalances have widened and risks remain elevated,” IMF Deputy Managing Director Antoinette Sayeh said in a statement.

“The authorities’ recent policy efforts to strengthen economic resilience are welcomed,” she said, noting “Timely and consistent implementation of policies and reforms remain essential to lay the ground for stronger and more sustainable growth.”

Pakistan’s growth is expected to reach 4 percent this year, but the IMF warned its economy remains vulnerable to disruptions from the pandemic and geopolitical tensions.

To head off a debt default, Pakistan recently obtained loans of $3 billion each from China and Saudi Arabia, and $2 billion from the United Arab Emirates.

Meanwhile, IMF Managing Director Kristalina Georgieva on Feb. 3 said there was no alternative to a pending agreement with the Washington-based crisis lender to get Argentina out of its spiral of inflation and poverty.

“Our main focus is to get Argentina out of this very dangerous path of high inflation,” she told reporters.

Last week, Argentina and the IMF announced they had reached a deal to renegotiate a staggering $44 billion in debt in exchange for economic reforms, though further negotiations are expected.

Georgieva said these talks offered a path forward for Argentina, and without a deal, poverty would rise, particularly among children.

“What is the alternative? The alternative is nothing,” she said.

Georgieva declined to speculate on what would happen if Argentina’s Congress rejected the deal.