Islamabad, Mar 25 (PTI) The IMF has agreed to release the next tranche of USD 500 million loan for Pakistan after approving four pending reviews of the cash-strapped country’s economic progress.
The International Monetary Fund had agreed in 2019 to provide Pakistan USD 6 billion under a 39-month Extended Fund Facility (EFF) arrangement but it was disrupted due to COVID-19 pandemic last year.
Quoting official sources in Washington, the Dawn newspaper reported that the approval revives the USD 6 billion IMF loan programme after it remained latent for over a year and followed some tough decisions taken in Islamabad to stabilise the economy.
The measures included a steep rise in electricity bills, imposition of Rs140 billion taxes and agreeing to grant unprecedented autonomy for the central bank.
The executive board of the IMF endorsed the staff-level agreement, reached between the government of Pakistan and the Fund’s team last month.
The board’s approval has paved the way for the release of USD 500m third loan tranche, reported Dawn, adding that out of the USD 6 billion, the IMF has already disbursed USD 1.45 billion in two tranches, bringing the total disbursements to USD 2 billion.
The fiscal support programme is key for Pakistan to win the international confidence in its economy which is struggling to come out of the impact of the pandemic.
Last April, the IMF had postponed a board meeting for the approval of the second review after Islamabad failed to announce a mini-budget for readjusting the economy.
In February, both sides agreed to club the pending second, third, fourth and fifth reviews of the programme.
The separate completion of these reviews would have led to disbursements of USD 2.2 billion, which the IMF has now reduced to just USD 500 million.
For the first time in 68 years, Pakistan’s economy contracted in the outgoing fiscal year with a negative 0.38 per cent due to the adverse impact of the COVID-19 pandemic coupled with the already weak financial situation before the deadly infection hit the country.