By Staff Reporter
ISLAMABAD: Prime Minister Shehbaz Sharif expressed optimism on Wednesday that the International Monetary Fund (IMF) executive board would approve a $3 billion loan program, a lifeline for its struggling economy, later today.
The IMF’s executive board was scheduled to vote later in the day on the nine-month arrangement. The South Asian nation received initial staff level approval for the loan last month, a move that eased fears of a sovereign default and led to a rally in the nation’s dollar bonds.
“The meeting is happening today,” Sharif said at an event in Islamabad. “I hope the board will approve the programme. This programme will help Pakistan’s economy to stabilise.”
He thanked China and Saudi Arabia for their financial assistance, which he said helped avert a sovereign default.
Beijing rolled over $5 billion of Pakistan’s loan in the last three months, which Sharif said he believed played a major role in averting the debt default. Saudi Arabia deposited $2 billion in support funds with the central bank on Tuesday.
The nine-month short-term lifeline for Pakistan’s ailing economy, which has been on the cusp of default, came after eight months of tough negotiations over fiscal discipline.
Pakistan has been facing a severe balance of payments crisis, with its foreign exchange reserves dwindling to dangerously low levels. The country has also been mired in political turmoil since the ouster of former Prime Minister Imran Khan in a parliamentary vote of no confidence in April last year.
The IMF loan, if approved, would provide $1.1 billion upfront and the rest in installments. It would also unlock other sources of external financing from bilateral and multilateral lenders.
The loan program comes with stringent conditions, such as increasing tax revenues, reducing subsidies, raising electricity tariffs and devaluing the currency. These measures are expected to cause further hardship for ordinary Pakistanis, who are already suffering from high inflation and unemployment.
Sharif said his government was committed to implementing the reforms and hoped that the opposition parties would support them.
Analysts view the IMF board approval will also unlock other bilateral and multilateral external financing for Pakistan.
They said the approval of the loan program would boost investor confidence and ease some of the pressure on Pakistan’s economy, but warned that the challenges ahead were daunting.
The IMF has bailed out Pakistan 22 times since 1958, but most of the programs have been abandoned before completion because of a lack of political will or public resistance to the tough conditions.
In a bid to ensure that the programme’s measures are implemented in the lead-up to the elections due in October, the lender’s team met all mainstream political parties to seek support and consensus for the loan.
Former Prime Minister Imran Khan’s Pakistan Tehreek-e-Insaf said he gave his support for the deal.
Copyright © 2021 Independent Pakistan | All rights reserved
