New York/Islamabad, May 10: The International Monetary Fund (IMF) on Friday approved the immediate disbursement of about USD 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 USD 1 billion (SDR 760 million), bringing total disbursements under the arrangement to about USD 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 USD 1.4 billion (SDR 1 billion).
The IMF said in a statement that Pakistan’s 37-month EFF was approved on September 25, 2024, and “aims to build resilience and enable sustainable growth”, with priorities including entrenching macroeconomic sustainability.
It said the RSF will support Pakistan’s efforts to reduce vulnerabilities to natural disasters and to build economic and climate resilience.
Following the Executive Board discussion, Deputy Managing Director and Chair Nigel Clarke said risks to the outlook remain elevated, “particularly from global economic policy uncertainty, rising geopolitical tensions, and persistent domestic vulnerabilities”.
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 also opposed the IMF’s proposal to extend fresh loans of USD 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.
The IMF took note of India’s statements and its abstention from the vote.
India’s opposition at the IMF comes at a time when military conflict between India and Pakistan has intensified after a terrorist attack in Kashmir’s Pahalgam killed 26 people, mostly tourists, on April 22.
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.
“While the concern that fungible inflows from international financial institutions, like the IMF, could be misused for military and state-sponsored cross-border terrorist purposes resonated with several member countries, the IMF’s response is circumscribed by procedural and technical formalities.
“This is a serious gap highlighting the urgent need to ensure that moral values are given appropriate consideration in the procedures followed by global financial institutions,” the ministry said.
It further said that the Pakistan military’s deeply entrenched interference in economic affairs poses significant risks of policy slippages and reversal of reforms.
Even when a civilian government is in power now, the army continues to play an outsized role in domestic politics and extends its tentacles deep into the economy. A 2021 UN report described military-linked businesses as the “largest conglomerate in Pakistan”, the statement said.
The situation has not changed for the better; rather the Pakistan army now plays a leading role in the Special Investment Facilitation Council of Pakistan, it noted.
Meanwhile, a statement issued by the Prime Minister’s Office in Pakistan said, “Prime Minister Shehbaz Sharif expressed satisfaction over the approval of a USD 1bn dollar instalment for Pakistan by the IMF and the failure of India’s high-handed tactics against it.”
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”, it said.
“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 USD 1 billion, bringing total disbursements under the loan programme to about USD 2 billion.
On the successful completion of seven half-yearly reviews, Pakistan is entitled to seven equal instalments of about USD 1 billion under the loan programme.
Pakistan and the IMF had reached a three-year USD 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 this year on the first biannual review of the 39-month USD 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.(PTI)
