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IMF okays $1.3bn facility

December 08, 2001

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WASHINGTON, Dec 7: The International Monetary Fund’s executive board agreed late on Thursday evening to lend $1.3 billion to Pakistan for Poverty Alleviation Programme.

A detailed Press release, possibly detailing conditions on which the lending is based, was still awaited at noon on Friday, but Mr William Murray, an IMF spokesman, confirmed that the board had approved a three-year arrangement for Pakistan under the Poverty Reduction and Growth Facility (PRGF), totalling SDR 1.033 billion (about US$1.309).

As a result of the decision, he said, Pakistan would be able to draw SDR 86.16 million (about US$109 million) under the arrangement. PRGF loans carry an annual interest of 0.5 per cent, and are repayable over 10 years with a five-and-a-half-year grace period on principal payments.

The new package follows earlier aid to Pakistan and opens the way for favourable consideration of Pakistan’s case for debt relief and assistance at the forthcoming Paris Club meeting.

The Pakistan embassy said the IMF decision recognizes the country’s performance under the standby programme and reflects confidence in the present government’s handling of the economy. The IMF board was also said to have discussed providing additional help in the future.

The IMF and World Bank had been looking favourably at Pakistan’s economic performance before Islamabad’s decision to join the US “war against terrorism”, but US clout in the two international financial institutions has ensured a speedier and fuller response to Pakistan’s needs.

Pakistan can access $109 million immediately as part of the $1.3 billion approved on Thursday. The IMF executive board meeting had continued almost all day.

Agencies add: Pakistan has a foreign debt of 38 billion dollars. As a US ally in the military campaign in Afghanistan, Pakistan has suffered economically since the conflict started.