Pakistan averted a balance of payments crisis in 2008 by securing the $11 billion IMF loan. This was suspended two years ago after economic and reform targets were missed.—File Photo
Pakistan averted a balance of payments crisis in 2008 by securing the $11 billion IMF loan. This was suspended two years ago after economic and reform targets were missed.—File Photo

WASHINGTON: The International Monetary Fund’s board on Wednesday approved a $6.7 billion loan package for Pakistan to help the nation revive its ailing economy.

In a statement, the IMF said the three-year program should help Pakistan rebuild its reserves and prevent a crisis in the balance of payments.

IMF loans generally come with conditions for economic reform and should encourage other donors to step in with more funds.

Top finance ministry officials in Pakistan announced the Fund's approval of a package in August, pending the board’s decision and Pakistan’s progress on fiscal reforms.

The new loan will arrive just in time. As of August, the central bank had only about $5 billion left in foreign currency reserves, enough to cover less than five weeks of imports.

The Asian Development Bank, one of Pakistan’s major lenders, estimates that Pakistan needs $6 billion to $9 billion to meet its obligations, including about $5 billion in outstanding debt on an earlier $11 billion IMF loan package.

Pakistan averted a balance of payments crisis in 2008 by securing the $11 billion IMF loan. This was suspended two years ago after economic and reform targets were missed.

This time around, the government had to fulfill certain conditions set by the IMF before the loan could be approved, including slashing costly subsidies on electricity and sending out notices to 10,000 delinquent taxpayers.

Pakistan has one of the lowest tax-to-GDP ratios in the world. The IMF wants it to do more to tackle rampant tax evasion by the wealthy elite.

Pakistan gets $540 million immediately, and the rest will be disbursed after regular reviews of the program, the Fund said.


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Comments (10) Closed




Farhan
Sep 04, 2013 11:29pm

It is unacceptable! Why they are giving us such loan.

MKNaeem
Sep 04, 2013 11:29pm

Hurrah ; we did it again, country running on borrowed money & borrowed time.No body pays taxes especially big fish, so we keep on borrowing.

Omer Kayani
Sep 04, 2013 11:28pm

If this the way they (PML-N) want to run the country,then they really deserve another Musharraf.

Sonal
Sep 05, 2013 12:31am

Excellent, congratulations!

If $5bn is enough to fund only five weeks of imports, the $6.7bn loan seems quite inadequate!

Sooooo what are you guys going to do with the money?!?!

Ajmal Syed
Sep 05, 2013 12:59am

Great day for Pakistan!

Bilal Hassan
Sep 05, 2013 01:11am

This is great news for Pakistan!

Ahmer
Sep 05, 2013 05:08am

Wonderful news

malikk
Sep 05, 2013 07:38am

Great news for the ruling govt specially MNS & Mian Ishaq Dar (MID) who is simply overjoyed upon getting news from IMF.This way the PML-N can rejoice there cash coming into there pockets & the govt i suppose has decided not to send this money to Pakistan rather the place,city & country will be decided at a later stage by MID.

mehboob malik
Sep 05, 2013 10:03am

I am looking for the broken KASHKOL of Mian Nawaz Sharif. If this is good governance then what to say about bad? Congratulation to the whole corrupt nation on restoration of the KASHKOL again.

Salman
Sep 06, 2013 08:30am

@Bilal Hassan: Great How?