IMF grants $6.7 billion to Pakistan
The International Monetary Fund’s board has approved a $6.7 billion loan package for Pakistan in an effort to further revive the country’s ailing economy, confirming that Pakistan’s on track with the conditions of its IMF loan program.
Generally IMF loans come with conditions for economic reform. In a statement, the IMF said that the three-year program should help Pakistan rebuild its reserves and prevent a crisis in the balance of payments.
The Asian Development Bank, one of Pakistan’s major lenders, estimates that Pakistan needs $6 billion to $9 billion to meet its obligations, including about $5 billion in outstanding debt on an earlier $11 billion IMF loan package.
Pakistan averted a balance of payments crisis in 2008 by securing an $11 billion IMF loan. This was suspended two years ago after economic and reform targets were missed. This time, the government had to fulfill certain conditions set by the IMF before the loan could be approved, including slashing costly subsidies on electricity and sending out notices to 10,000 delinquent taxpayers.
Top finance ministry officials in Pakistan announced the Fund’s approval of a package in August, pending the board’s decision and Pakistan’s progress on fiscal reforms. As of June 2014, it seems Pakistan has more or less lived up to the kind of development IMF had in mind when it granted the previous loan.