The International Monetary Fund (IMF) has approved the release of 750 million special drawing rights (SDR) (about $1 billion) to Pakistan, resuming a stalled assistance programme to the South Asian nation.
The global institution freed the loan after Imran Khan’s government agreed to the fund’s demands to pass a series of austerity measures.
“The authorities’ recent economic and financial policy efforts were appropriate to safeguard macroeconomic stability and debt sustainability,” the IMF said.
The release brings total purchases for budget support under the programme to 2.14 billion SDR ($3 billion) to Pakistan.
The $6 billion programme started in 2019 but had stalled after the government resisted implementing some of the fund’s fiscal conditions.
But the Pakistani economy is now struggling with soaring inflation and dwindling foreign reserves.
“The Pakistani economy has continued to recover despite the challenges from the Covid-19 pandemic, but imbalances have widened and risks remain elevated,” IMF deputy managing director Antoinette Sayeh said.
Khan’s government passed a law last month that cut development spending, electricity and gas subsidies and sales tax concessions on certain raw materials.
These are designed to raise 600 billion rupees ($3.4 billion) in the financial year ending June 2022.
“Further ambitious efforts to remove structural impediments and facilitate the structural transformation of the economy will help unlock sustainable and resilient growth, foster job creation, and improve social outcomes for the benefit of all Pakistani citizens,” the IMF said.
- George Russell