IMF approves $1 billion loan for Pakistan

New York/Islamabad: The International Monetary Fund (IMF) on Friday approved the immediate disbursement of about $1 billion to Pakistan under the ongoing Extended Fund Faci­li­ty.

In a statement, the Washington-based global lender said its Executive Board concluded the initial review of Pakistan’s economic reform programme under the Extended Fund Facility (EFF) arrangement.

"This decision allows for an immediate disbursement of around $1 billion (SDR 760 million), bringing total disbursements under the arrangement to about $2.1 billion (SDR 1.52 billion),” the agency said.

In addition, the IMF Executive Board approved the authorities’ request for an arrangement under the Resilience and Sustainability Facility (RSF), with access of about $1.4 billion (SDR 1 billion).

India earlier raised concerns over the efficacy of IMF programmes in the case of Pakistan, given its poor track record, and also on the possibility of misuse of debt financing funds for state-sponsored cross-border terrorism.

New Delhi opposed the IMF's proposal to extend fresh loans of $2.3 billion to Pakistan, saying they could be misused for financing state-sponsored cross-border terrorism.

India registered its protest at the board of IMF, which met on Friday to review the EFF lending programme for Pakistan.

New Delhi abstained from voting at the crucial IMF meeting.

India pointed out that rewarding continued sponsorship of cross-border terrorism sends a dangerous message to the global community, exposes funding agencies and donors to reputational risks, and makes a mockery of global values, the Indian finance ministry said in a statement.

India's opposition at the IMF comes at a time when military conflict between India and Pakistan has intensified.

Meanwhile, a statement issued by the Prime Minister's Office in Pakistan said, "Prime Minister Shehbaz Sharif expressed satisfaction over the approval of a $1bn dollar instalment for Pakistan by the IMF and the failure of India’s high-handed tactics against it."

The statement issued by the PM office in Islamabad said Pakistan's "economic situation has improved, and the country is moving towards development. India is plotting a conspiracy to divert attention from our country’s development through unilateral aggression."

"Indian attempts to sabotage the IMF programme have failed,” the statement said, adding that the IMF programme would help stabilise the economy and put it on the path towards long-term recovery.

"We are working on priority areas such as tax reform, improved energy sector performance and private sector development. The improved economic indicators in the last 14 months are a reflection of the government’s positive policies," it said.

The approval of the IMF’s executive board has led to an immediate disbursement of $1 billion, bringing total disbursements under the loan programme to about $2 billion.

On successful completion of seven half-yearly reviews, Pakistan is entitled to seven equal instalments of about $1 billion under the loan programme.

Pakistan and the IMF had reached a three-year, $7 billion aid package deal in July last with the new programme set to allow the country to cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth.

The IMF and Pakistan had reached a staff-level agreement on March 25 on the first biannual review of the 39-month $7 billion loan programme, agreeing on a series of reforms including the introduction of a carbon levy, timely revisions to electricity tariffs, increased water pricing and liberalisation of the automobile sector.