WASHINGTON: The International Monetary Fund (IMF) approved the completion of the sixth review of its Extended Fund Facility (EFF) programme for Pakistan on Wednesday.
According to an announcement released in Washington where the meeting to review the programme was held, the completion of this review allows for an immediate disbursement of SDR 750 million (about $1 billion) to Pakistan, bringing total disbursements under the arrangement to SDR 2,144 million (about $3 billion), or 106 per cent of the country’s quota.
In Islamabad, Finance Minister Shaukat Tarin confirmed the approval in a tweet posted on his official account. “I am pleased to announce that the IMF Board has approved the 6th tranche of their program for Pakistan,” he wrote.
The IMF provides EFF loan facilities to a country facing serious medium-term balance of payments problems because of structural weaknesses that require time to address. Compared to assistance provided under the standby arrangement, assistance under an extended arrangement features longer programme engagement — to help countries implement medium-term structural reforms — and a longer repayment period.
Pakistan made a 39-month EFF arrangement with the IMF in July 2019 for SDR 4.268bn (about $6bn at the time of approval of the arrangement) package, which was 210pc of the quota.
The programme aims to support Pakistan’s policies to help the economy and save lives and livelihoods amid the still unfolding Covid-19 pandemic, ensure macroeconomic and debt sustainability and advance structural reforms to lay the foundations for strong, job-rich and long-lasting growth that benefits all Pakistanis.
The sixth review was scheduled for January 12, 2022, and later January 28, but was postponed twice on Pakistan’s request, to attain more time for implementing IMF conditions.
Pakistan met some of the conditions in the mini-budget passed recently as well as in a bill to grant more autonomy to the State Bank of Pakistan.
Finance ministry officials told journalists in Islamabad earlier this week that they had sent a report to the IMF about the implementation of these conditions and were hopeful that the Fund would now release the sixth tranche.
As part of the effort, the government withdrew subsidies and tax concessions of up to Rs343bn and passed legislation that has awarded greater autonomy to the central bank.
In November, a finance ministry delegation reached a staff-level agreement with an IMF team after protracted talks in Washington.
The reversal in rupee trajectory comes after the government succeeded in passing the Finance (Supplementary) Bill 2021 and the State Bank of Pakistan (Amendment) Bill 2021, amid strong protest by the opposition. Positive speculations about the approval of the IMF arrangement also helped the Pakistani currency, which started the week with a slight improvement against the US dollar, appreciating 0.03pc in the inter-bank market.