IMF Executive Board Approves $1 Billion Disbursement for Pakistan

WASHINGTON, Feb 2 (Reuters) – The International Monetary Fund said on Wednesday its board had approved a $1 billion disbursement to Pakistan after completing a sixth review of the country’s reforms under its lending program. of $6 billion.

The disbursement brings Pakistan’s total drawdown from the Expanded Funding Facility program for budget support to approximately $3 billion. The program was initially approved in July 2019.

The IMF said the program had boosted Pakistan’s fiscal reserves before the onset of the COVID-19 pandemic, and a strong economic recovery has taken hold since the summer of 2020.

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But he warned that the widening current account deficit and the depreciation of the currency had increased pressures on domestic prices.

Pakistan’s GDP growth is expected to reach 4% this year, but its economy remains vulnerable to COVID-19 outbreaks, tightening international financial conditions, rising geopolitical tensions and delayed implementation of structural reforms, the IMF said.

“Pakistan’s economy has continued to recover despite the challenges of the COVID-19 pandemic, but imbalances have widened and risks remain elevated. The authorities’ recent policy efforts to build economic resilience are welcome,” he said. IMF Deputy Managing Director Antoinette Sayeh said in a statement. declaration.

“The rapid and consistent implementation of policies and reforms remains essential to lay the foundations for stronger and more sustainable growth,” she added.

Sayeh added that preserving a market-determined exchange rate was crucial to absorb external shocks and maintain Pakistan’s competitiveness and that amendments to central bank legislation would help strengthen the institution’s independence. .

“Significant efforts to advance power sector reform are needed to restore the financial sustainability of the sector and address the negative fallout on the budget, the financial sector and the real economy,” she added. .

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Reporting by David Lawder and Andrea Shalal; Editing by Leslie Adler and Chris Reese

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