The Executive Board of the International Monetary Fund (IMF) on April 16, 2020 approved an amount of SDR 1.015 billion (USD 1.386 billion) for Pakistan. The request was made by Pakistan under the Rapid Financing Instrument (RFI) lending facility for grant of 50 percent of quota, entitled under the IMF`s COVID response measures. The quota of Pakistan is SDR 2.031 billion.
The financial assistance is primarily approved to meet the urgent balance of payment (BOP) needs and economic impacts originating from the outbreak of the COVID-19 pandemic. The pandemic has created an urgent fiscal and balance of payments need as the external financing gap is estimated to be around $2 billion for Q4 FY2020. Exports and remittances are expected to decline sharply, which together with a temporary loss of market access create an urgent BOP need. The IMF support will help to provide a boost to the declining international reserves and provide financing to the budget for supporting the measures to contain the pandemic and mitigating its economic impact.
It is anticipated that the IMF`s support under the RFI will encourage additional support from the World Bank and Asian Development Bank, as well as from bilateral donors.
The Managing Director IMF, in her statement highlighted the measures taken by Pakistani authorities such as introduction of economic stimulus package to support economic activity and tackle the health emergency, lowering of the policy rate and launching of new refinancing facilities.
The Pakistani authorities have also renewed commitment to the reforms in the existing Extended Fund Facility (EFF), particular those related to fiscal consolidation strategy, energy sector, governance, and remaining AML/CFT deficiencies.
Earlier, the Prime Minister of Pakistan Mr. Imran Khan had urged the global community, international financial institutions and the Untied Nation Security General to launch an initiative to help the developing nations in their fight against the global Pandemic. It is also worth mentioning that Pakistan is also included in the countries eligible for debt relief announced by the G20 countries.
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