IMF approves $1.386b loan to shore up Pakistan’s economy

The IMF has approved a $1.386 billion loan to Pakistan to bolster the economy during the COVID-19 pandemic.

The loan is to meet urgent balance of payment needs that have arisen due to the pandemic An IMF press release noted that the country’s health spending and social welfare support have increased during this time.

“The outbreak of COVID-19 is having a significant impact on the Pakistani economy. The domestic containment measures, coupled with the global downturn, are severely affecting growth and straining external financing. This has created an urgent balance of payments need,” said Executive Board First Deputy Managing Director and Acting Chair Geoffrey Okamoto.

The press release noted that the IMF emergency financing provides strong support to the Pakistani authorities’ emergency policy response, “preserving fiscal space for essential health spending, shoring up confidence and catalysing additional donor support”.

Loans given under the IMF’s rapid financing instrument, as this one has been, have to be repaid in 3.25 to 5 years.

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