IMF to consider USD 1.4 bn loan to Pak to deal with adverse economic impact of COVID-19

Islamabad: The International Monetary Fund (IMF) is all set to consider a loan of USD 1.4 billion for cash-strapped Pakistan to boost its foreign exchange reserves in the wake of the economic slowdown due to the coronavirus crisis.

The USD 1.4 billion loan is in addition to the USD 6 billion bailout package that Pakistan has signed with the IMF in July last year to stave off a balance of payment crisis.

The global money lender has called its executive board meeting on April 16 to consider an extra loan of USD 1.4 billion for Pakistan to boost its foreign exchange reserves and extend budgetary support in the wake of the economic slowdown the country is facing due to the deadly viral infection, the Express Tribune reported on Monday.

Pakistan in March had requested the IMF for a low-cost, fast-disbursing loan under the fund’s Rapid Financing Instrument (RFI) to deal with the adverse economic impact of COVID-19.

“We have been working with the Pakistani authorities since the request was placed. This USD 1.4 billion disbursement is scheduled to happen next week,” IMF Resident Representative in Pakistan Teresa Daban Sanchez was quoted as saying by the report.

The RFI is used to provide financial assistance to IMF member countries facing an urgent balance of payments need without requiring them to put a full-fledged programme in place.

Sanchez said the IMF was working with the finance ministry to make sure that Pakistan has “enough resources to navigate through this difficult time”.

Meanwhile, Prime Minister Imran Khan has appealed for a “global initiative on debt relief” to help developing countries like Pakistan to overcome disastrous impacts of the novel coronavirus pandemic.

In a televised speech on Sunday, Khan noted that the deadly virus posed unprecedented health and economic challenges and the global recession is a certainty, which could be worse than the “Great Depression”.

“A global pandemic cannot be contained without strong, coordinated and well-crafted global response,” he said, urging the international community, particularly the United Nations Security Council and the international financial institutions, to respond positively to the dilemma confronting the developing counties in the wake of the COVID-19 outbreak.

“In the developed world, the dilemma is coronavirus and economy. But we as a developing nation face another major dilemma, how to prevent people from dying of hunger. I implore those who walk in the corridors of power to make a stimulus package for the developing world to help them through this economic downturn,” Khan said.

Pakistan has recorded more than 5,370 COVID-19 cases and over 92 people have died due to the disease.

The government has already announced Rs 1.2 trillion fiscal stimulus package to offset the adverse impacts of the viral pandemic on the country’s fragile economy.

The country also approached multilateral donors for additional funds to fight the pandemic and its economic implications.

The World Bank has earlier approved USD 1 billion and the Asian Development Bank (ADB) USD 1.5 billion for Pakistan to keep its economy afloat.

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