The International Monetary Fund (IMF) has said that it stands ready to help Pakistan navigate the difficult situation it’s facing due to the Covid-19 crisis and a slowing economy.
Finance Minister Shaukat Tarin said in Islamabad on Wednesday that Pakistan had urged the IMF to reconsider the “tough conditions” attached to its loans.
In May 2019, Pakistan and the IMF signed a $6 billion bailout for the country’s debt-ridden economy, which has been further emaciated by the Covid-19 crisis.
At a Thursday afternoon news briefing in Washington, IMF’s Director for Commun-ications Gerry Rice recalled that just about a month ago, the Fund completed the pending third, fourth and fifth review of its extended loan facility to Pakistan.
“And the decision by our board at that time allowed for an immediate disbursement of about $500 million, which brought total disbursements to Pakistan to about two billion dollars,” he added.
Fund official says IMF is looking forward to continuing talks with Islamabad
Focusing on the current situation, he said: “We stand ready to support Pakistan navigate the difficult situation it is facing, (due to) the Covid crisis, while helping to ensure the objective of debt sustainability with strong and sustainable growth.”
The IMF, he said, was “looking forward to continuing discussions with the Pakistan authorities when the time comes for the sixth review, [since] as I mentioned, other reviews having been completed just about a month ago”.
In a statement issued on April 8, after the last review, the IMF noted that the Covid-19 shock had temporarily disrupted Pakistan’s progress under the IMF-supported programme. It also said that Pakistan’s policies “have been critical in supporting the economy and saving lives and livelihoods”.
The statement appreciated the corrective measures Pakistan had taken to improve its economy, including a temporary fiscal stimulus, large expansion of social safety nets, monetary policy support, and targeted financial initiatives.
The IMF, however, noted that “a second Covid-19 wave is unfolding, triggering exceptionally high uncertainty and downside risks”.
On Wednesday, the finance minister also mentioned the uncertainties triggered by the second wave, adding that Pakistan could no longer meet the “tough targets” included in the IMF programme.
Mr Tarin said at his news briefing that Pakistan did not want to leave the programme but had asked the IMF to give “us some space … and they are very sympathetic”.
Authorities in Islamabad have warned that the rapidly increasing Covid-19 deaths and infections could force them to shut non-essential businesses and transport for almost two weeks starting on May 5. The aim is to stem the spread of new Covid-19 variants, but it will also have an adverse effect on the country’s ailing economy.
The budget for the 2021-22 fiscal year is just weeks away, and authorities feel that they need more space to make a balanced budget — but could not do so while fulfilling IMF’s conditions.
Last year, the national economy contracted 0.4 per cent and Pakistan’s consumer price inflation climbed to 11.1pc in April, the highest in 11 months.
The government has revised growth projections for fiscal 2020-21 to 3pc, but the IMF has predicted a much lower 1.5pc growth.