IMF grants $6.7 bil­lion to Pak­istan

Enterprise - - 8 -

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.

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