WASHINGTON D.C.: The International Monetary Fund (IMF) is expected to approve the second tranche of the $6 billion Extended Fund Facility (EFF) to Pakistan in a meeting of its executive board scheduled to be held later in the day.
The Fund agreed to a three-year rescue package for Pakistan in April this year – country’s 13th bailout program since the late 1980s – as the economic situation had started to appear bleak.
“Completion of the review will enable disbursement of SDR 328 million (or around $450 million) and will help unlock significant funding from bilateral and multilateral partners,” Ramirez Rigo, head of an IMF mission to Islamabad, said in a statement after the mission completed its first review of its program.
“The government policies have started to bear fruit, helping to reserve the buildup of vulnerabilities and restore economic stability. The external and fiscal deficits are narrowing, inflation is expected to decline and growth although slow, remains positive,” the IMF statement said.
The IMF said Pakistan’s near-term economic outlook was broadly unchanged from the time of the program approval in April, with gradually strengthening activity and average inflation expected to decelerate in the 2020 fiscal year. However, domestic and international risks remain, and structural economic challenges persist, it said.
Pakistan has lifted interest rates over the past year to tame high inflation, which eased to 11.04% in October from 11.37% in September.
The government of Prime Minister Imran Khan, since assuming office in August last year, obtained temporary relief from close allies such as China and Saudi Arabia with short-term loans worth more than $10 billion to buffer foreign currency reserves and ease pressures on the country’s current account.
But analysts had called an IMF bailout inevitable, as Pakistan faced an increasing fiscal crunch.
