The International Monetary Fund (IMF) approved the provision of a $1.386 billion emergency loan to Pakistan to stabilize the economy amid COVID-19 outbreak.
“The Executive Board of the International Monetary Fund (IMF) approved a purchase of Pakistan under the Rapid Financing Instrument (RFI) equivalent to SDR 1,015.5 million (US$ 1.386 billion, 50 percent of quota) to meet the urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic,” said the statement issued by IMF.
According to Mr Geoffrey Okamoto – First Deputy Managing Director and Acting Chair IMF, “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. IMF emergency financing under the Rapid Financing Instrument provides strong support to the authorities’ emergency policy response, preserving fiscal space for essential health spending.”
Additionally, the State Bank of Pakistan has lowered policy rates, to support liquidity and credit conditions and safeguard financial stability.
Prior to this, on April 13, IMF Executive Board had approved an urgent debt service relief to 25 of the IMF’s member countries under the IMF’s revamped Catastrophe Containment and Relief Trust (CCRT) as part of the Fund’s response to help address the impact of the COVID-19 pandemic.
It was followed by IMF’s announcement to give one-year relief in debt payments to 70 developing nations including Pakistan.
Earlier, Pakistani officials had warned that even under moderate restrictions, employment loss could be up to 12 million, around 20% of the employed labour force of the country. Pakistan Institute of Development Economics (PIDE) had estimated that the virus crisis could result into unemployment ranging from 12 to 20 million and the monthly average losses of losing jobs stood at Rs 180 billion to Rs 260 billion.
