Washington, Feb 3: The International Monetary Fund (IMF) approved a disbursement of approximately $1 billion to Pakistan to help the country’s economy, the fund said in a statement.
“The Executive Board of the International Monetary Fund concluded the 2021 Article IV consultation and the sixth review of the extended arrangement under the Extended Fund Facility (EFF) for Pakistan.
The completion of the review allows the authorities to draw the equivalent of SDR 750 million (about US$1 billion), bringing total purchases for budget support under the program to SDR 2,144 million (about US$3 billion, or 106 percent of quota),” the IMF said on Wednesday.
Economic activity in Pakistan rebounded strongly from the first waves of the COVID-19 pandemic but pressures are starting to build, reflected in the country’s widening deficit and inflation, the IMF said.
The recent policy efforts were appropriate to safeguard economic and debt sustainability, the IMF added.
Strong efforts to advance electricity sector reform are needed to restore the sector’s financial viability and address adverse spillovers on the budget, financial sector and real economy, IMF Executive Board Deputy Managing Director and Acting Chair Antoinette Sayeh said in the statement.
Reforms in the areas of tax administration and public financial and debt management are also expected to further improve the fiscal framework, Sayeh said.
“Ambitious steps to remove structural impediments and facilitate structural transformation remain essential to boost growth and job creation and improve social outcomes,” Sayeh added.
“The authorities are focused on state-owned enterprises reform, fostering the business environment and reducing corruption, promoting financial inclusion; and addressing the challenges posed by climate change.”
The approval comes as the IMF and Pakistan had struggled with coming to an agreement with the country fighting external and current account deficits, a depreciating currency, and rising inflation.
Pakistan’s parliament passed a mid-year budget in January that will end exemptions on sales tax as part of measures to secure the IMF funds. (UNI)
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