The International Monetary Fund (IMF) has delayed the review of the two USD 6 billion bailout packages for Pakistan scheduled for Friday, citing delays by the state in implementing agreed actions, a media report said today.
The International Monetary Fund Executive Board approved a three-year, $ 6 billion loan package for Pakistan in July last year to curb rising debt and prevent a shadowing balance of payments crisis, in return for difficult austerity measures.
Pakistan approached the IMF in August 2018 for a bailout package after Prime Minister Imran Khan’s government took over.
Apart from loans from China, Saudi Arabia and the UAE, the Imran Khan government also approached the IMF due to increasing economic problems.
The IMF has confirmed the delay in reviewing the two bailout packages but said its priorities have now shifted to the approval of a $ 1.4 billion fast financing facility.
Pakistan’s Ministry of Finance told The Express Tribune that the IMF did not notify him of the delay in approval of the second review of the 10-month loan program.
In February, Pakistan and the IMF agreed that the fund’s executive board would approve a second review for the release of a third loan phase of USD 450 million on April 10, subject to the fulfillment of all conditions by the Pakistani government.
According to The Express Tribune, sources said the IMF board would not accept Pakistan’s request for approval for a second review for the October-December 2019 period under the Extended Fund Facility (EFF) on April 10.
“The priority now is to move forward with the Rapid Financing Instrument (RFI). The IMF team and Pakistani authorities are working hard for approval and immediate disbursement,” IMF Resident Representative Teresa Daban Sanchez said.
The initial agreed tentative date, as provided in the IMF document, for the approval of the second review was March 6, which the IMF extended to April 10.
The IMF has not yet given a new date for approval of the second review. But USD 1.4 billion in additional facilities for assistance with COVID-19 can be approved this month.
Pakistan has requested a USD 1.4 billion emergency facility from the IMF to offset the impact of COVID-19 on the external sector.
Teresa Sanchez said about the EFF, as IMF Managing Director Kristalina Georgieva stated in the announcement of Pakistan’s RFI request, the Pakistani authorities remained committed to the policies and reforms outlined under the EFF-supported program.
“The priority now is to run the RFI and there will soon be a board meeting that will discuss, assess and provide guidance on the next steps,” Ms Sanchez said.
But the delay in agreeing to the second review could create more problems for the government because of its implications for Pakistan’s market and financial relations with other multilateral lenders.
The final agreement was the 22nd bailout package since Pakistan became a member of the IMF in 1950.
Previously, China gave USD 4.6 billion in commercial deposits and loans and Saudi Arabia provided USD 3 billion in cash and USD 3.2 billion in oil facilities for deferred payments. The United Arab Emirates also provided a USD 2 billion cash deposit to Pakistan.