Business

IMF to provide $510 million aid tranche to Pakistan

IMF says Pakistan's gross domestic product growth is projected at 4.5 per cent

Reuters May 12, 2016

PHOTO: REUTERS

The International Monetary Fund said on Thursday that it had reviewed Pakistan's economic performance and would make available a further $510 million to the country as part of a three-year, $6.7 billion financial assistance programme.

The money will be provided when the review is approved by the IMF´s management and executive board, the Fund said in a statement, describing its discussions with Pakistan as "productive" and adding that performance criteria in the programme had been met.

IMF says Pakistan ready to go it alone when programme ends

Pakistan's gross domestic product growth is projected at 4.5 per cent in the 2015/16 fiscal year and 4.7 percent in the following year, the IMF said.

Last month, a senior fund official had claimed that Pakistan would be ready to go it alone when its $6.7 billion three-year IMF programme ends in September. Masood Ahmed, director of the IMF’s Middle East and Central Asia department, had told Reuters substantial progress had been made in repairing Pakistan’s economy and that Islamabad was right to be saying is does not need another package.

A total of $1.1 billion of the $6.7 billion package is due to be disbursed before the programme ends in September. This year has seen some behind-the-scenes grumbling from IMF officials when the government shelved plans to privatise its main power companies.

Last month it also switched away from privatising Pakistan International Airlines (PIA) but with growth expected to be 4.5 percent this year, neither have caused enough alarm for a formal IMF rebuke for Islamabad.

IMF approves $497m loan for Pakistan after bailout review

“The next phase (once the programme ends) is to continue with the reforms that they have on structural measures that will sustainably raise their growth rate and particularly raise their exports,” said Ahmed. “The current level of exports they have, which is about $25 billion, for an economy of over $280 billion it needs to be double that.”

COMMENTS (8)

cephqorexi | 8 years ago | Reply A couple of weeks ago, I header finance minister saying Pakistan was no more in need of IMF aids and subsequently IMF itself had acknowledged the statement from PAK minister to be true. Wondering whatever happened to self sufficiency that soon!

mohan | 8 years ago | Reply problem at pak is not the money and development, they need the exports to reduce trade deficit means, they have to produce exportable goods, infra is necessary for that. but why to take loans to develop internal infra? china indeed not giving a single penny to pak in CPEC to bail out from loan crisis, they adding more troubles on pak with extra increased debt. cant pak build the road project in pak with its own man power and material? why pak need to depend for this on china? what the govt doing is bad for the economy, pak is going to face severe problems with loans in future, as the exportable products aren't produced more, the trade deficit is increasing every month. pak just cant rely on china, as all knows that only few provinces of chinese goods will be exported from gadwar port, that means yearly a 15-20 billion dollars exports, pak can have a 5 percent of the price means max 1 billion dollars. its lass than what pak pay by interest. as 8 pc on 46 billion is about 4 billion per year. so 3 billion deficit and actual loan amount is the problem. this leads to bankruptcy, pak need to work very serious actions on generating dollar reserves. else pak will lose more than what it gain. few leaders saying china will export 2 trillion dollars through pak its fake one. china total exports worth 2 trillion. and many of them had land route, they dont need gadwar port for many exports than 15-20 billion per year. CPEC gonna milk pak economy, it sounds bitter but truth.

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I. Khan (CAN) | 8 years ago | Reply Pakistan should not get any loans and Aid from any international body or a country. Pakistan must be very wealthy, their leaders can live like kings in Middle East and Europe and wear 4.7 million dollars wrist watch while their sons live in 90 million dollars condo in London and other leaders own Châteaux in France . 90% of any loans and aid Pakistan gets goes to their leaders foreign accounts.

curious2 | 8 years ago | Reply @vinsin:

IMF comes with terms and conditions. No one gives money at lower interest rate for free. IMF money is seen as assistance whereas Euro Bonds are loans.

Ask any businessman whether their bank loan comes with "conditions" -- the list of loan covenants is often very long. IMF essentially ask Pakistan not to spend more money than it earns - hence the recommendations for raising taxes and cutting expenditures - same kind of restrictions normal people impose on ourselves.

Pragmatic Pakistani | 8 years ago | Reply vinsin IMF's main condition is to cut expenditure and increase revenue which every govt should do anyway.

vinsin | 8 years ago | Reply @Pragmatic Pakistani: IMF comes with terms and conditions. No one gives money at lower interest rate for free. IMF money is seen as assistance whereas Euro Bonds are loans.

Pragmatic Pakistani | 8 years ago | Reply IMF lends at 2%.Local banks lend to government at about 7%.Euro bonds launched by the government at 8%.If you do have to borrow money which one is better?2% or 8%?After the IMF programme ends the govt will be borrowing all its money at a much higher interest rate.

Shahid Akram | 8 years ago | Reply Pakistani government is taking more and more loan. This will not help to improve economy. They will make Pakistan like Greece.

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