IMF to provide Pakistan $1.4 billion to stabilise economy amid coronavirus crisis

The International Monetary Fund plans on providing Pakistan $1.4 billion by next week  to improve the country's financial situation as it fights coronavirus,   Arab News reported on Wednesday.

According to the publication the aid aims "to boost its foreign exchange reserves and get some budgetary support in the wake of the economic slowdown due to the coronavirus pandemic."

 The government had last month, requested the international lender to consider giving it "a low-cost, fast-disbursing loan under the fund’s Rapid Financing Instrument (RFI) to deal with the adverse economic impact of COVID-19", according to the publication.

“We have been working with the Pakistani authorities since the request was placed … This $1.4 billion disbursement is scheduled to happen next week,” Teresa Daban Sanchez, the IMF Resident Representative in Pakistan, told Arab News.

The global body's Rapid Financing Instrument (RFI) provides a boost in finances to IMF member countries in need of urgent balance of payments. The financial assistance is made without a full-fledged programme and given under circumstances such as commodity price shocks, natural disasters, conflict and post-conflict situations.

Sanchez said that the IMF is working with the finance ministry to ensure that Pakistan has enough financial resources "to navigate through this difficult time”.

The new loan would be in addition to the ongoing three-year Extended Fund Facility (EFF) worth $6 billion which Pakistan entered into last July.

“Pakistani authorities remain committed to the policies and reforms outlined under the EFF-supported program,” the IMF resident representative said.

According to Arab News: "The IMF has deferred approval of the second review of the $6 billion bailout programme which was supposed to pave the way for a disbursement of $450m this month."

“The EFF is still there. We’re working on that. But now the priority is to work on the rapid financing instrument and that’s why everybody is working on that,” Sanchez explained.

Last month, Prime Minister Imran Khan had announced a Rs1.2-trillion economic relief package as the number of confirmed cases sharply rose in the country. The package was subsequently accorded approval by the cabinet on March 31.

Additionally, the World Bank has approved a $1 billion loan and the Asian Development Bank has approved $1.5 billion in aid for Pakistan.