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 are closed.

Comments (11)

Farhan
September 4, 2013 11:29 pm

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

MKNaeem
September 4, 2013 11:29 pm

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
September 4, 2013 11:28 pm

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

Sonal
September 5, 2013 12:31 am

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
September 5, 2013 12:59 am

Great day for Pakistan!

yaqoot Mir
September 5, 2013 1:10 am

Yippeee Pakistan sold its prinples and soul to the west again and secured 540 million dollars in Bheek, the other part of the IMG money we will never get because the terms being asked for are IMPOSSIBLE to meet. Net result, we sold ourselves for 30 days worth of oil imports. Man this country has sunk to new lows every year starting with the end of Musharraf. I wish he could just come back! forget this sham democracy!

Bilal Hassan
September 5, 2013 1:11 am

This is great news for Pakistan!

Ahmer
September 5, 2013 5:08 am

Wonderful news

malikk
September 5, 2013 7:38 am

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
September 5, 2013 10:03 am

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
September 6, 2013 8:30 am

@Bilal Hassan: Great How?

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