IMF approves $500 million tranche for Pakistan after noting “satisfactory progress”

The International Monetary Fund (IMF) approved a $500 million disbursement to Pakistan for budgetary support after its Executive Board completed delayed reviews of Pakistan’s $6 billion loan program.

According to the report published by Business Recorder, IMF Deputy Managing Director Antoinette Sayeh told this in a statement saying the latest payment brought total disbursements under the Extended Fund Facility to $2bn since the program was first approved in July 2019.

Pakistan’s 39-month EFF arrangement was approved by the Executive Board on July 3, 2019 for SDR 4.268 billion (about $6 billion at the time of approval of the arrangement, or 210 percent of quota).

As per the IMF, the program aims to support Pakistan’s policies to help the economy and save lives and livelihoods amid the still unfolding Covid-19 pandemic, ensure macroeconomic and debt sustainability, and advance structural reforms to lay the foundations for strong, job-rich, and long-lasting growth that benefits all Pakistanis.

“The Pakistani authorities have continued to make satisfactory progress under the Fund-supported program, which has been an important policy anchor during an unprecedented period. While the Covid-19 pandemic continues to pose challenges, the authorities’ policies have been critical in supporting the economy and saving lives and livelihoods. The authorities have also continued to advance their reform agenda in key areas, including on consolidating central bank autonomy, reforming corporate taxation, bolstering management of state-owned enterprises, and improving cost recovery and regulation in the power sector,” said IMF Deputy Managing Director Antoinette Sayeh.

“Reflecting the challenges from the unfolding pandemic and the authorities’ commitment to the medium-term objectives under the EFF, the policy mix has been recalibrated to strike an appropriate balance between supporting the economy, ensuring debt sustainability, and advancing structural reforms while maintaining social cohesion,” the Managing Director added. “Strong ownership and steadfast reform implementation remain crucial in light of unusually high uncertainty and risks.”

The release of this tranche is part of the revival of the $6 billion program that was suspended in April 2020 after Pakistan failed to bring a mini-budget for the readjusting of the economy.