NEW YORK: The International Monetary Fund Executive board approved a three-year, $6 billion loan package for Pakistan to rein in mounting debts and stave off a looming balance of payments crisis, in exchange for tough austerity measures.
Board approval will allow immediate disbursement of around $1 billion, with the remainder to be phased in over the period of the programme, subject to quarterly review, the IMF said, highlighting the need for Pakistan to agree to tough conditions for the coming three years.
Just as important as the package itself, approval will also unlock an additional $38 billion from Pakistan›s international partners over the programme period.
“Pakistan is facing significant economic challenges on the back of large fiscal and financial needs and weak and unbalanced growth,”IMF First Deputy Managing Director David Lipton said in a statement.
The programme will require “decisive fiscal consolidation”and a multi-year plan to strengthen Pakistan›s notoriously weak tax system as well as large scale reforms that are likely to pile pressure on the government of Prime Minister Imran Khan.
Khan came to power last August, inheriting an economy plagued with problems. But he was initially deeply reluctant to turn to the IMF, which has provided more than 20 bailout packages to Pakistan over the decades.