IMF plans to revive USD 6 billion Pakistan funding programme

Washington: The United Nations (UN) International Monetary Fund (IMF) on Monday said that it has come to an agreement with Pakistan on terms to help revive a USD 6 billion funding programme for the country.

The international financial institution today said that it had reached a staff-level agreement with Pakistani authorities in the context of policies and reforms required to complete the sixth review under the $6 billion Extended Fund Facility (EFF) which has been “in recess” since April.

“The agreement is subject to approval by the Executive Board, following the implementation of prior actions, notably on fiscal and institutional reforms,” IMF’s statement read.

“Completion of the review would make available (Special drawing rights) SDR 750 million (about US$1,059 million), bringing total disbursements under the EFF to about US$3,027 million and helping unlock significant funding from bilateral and multilateral partners. An additional SDR 1,015.5 million (about US$1,386 million) was disbursed in April 2020 to help Pakistan address the economic impact of the COVID-19 shock,” added IMF.

The recent USD 6 billion funding programme dates back to 2019. The funding went through a halt this year due to prevailing reform issues in Pakistan.

The revival of said funding programme is subject to finalisation of the National Socio-economic Registry (NSER) update, adoption of amendments in the National Electric Power Regulatory Authority (Nepra) Act, pending quarterly power tariff adjustments, and payment of the first tranche of outstanding arrears to independent power producers (IPPs) reported Dawn citing IMF sources.

IMF further stressed the necessity to curb inflation, preserve exchange flexibility rate and fortify international reserves, reported Dawn.

Lately, Pakistan has been witnessing currency devaluation, high inflation and a current account deficit while investors have become nervous about the outcome of the talks between the government and the IMF.