IMF board meets to finalise $6b loan for Pakistan

If approved, first tranche of $500m will be released in current month

ISLAMABAD: The Executive Board of the International Monetary Fund [IMF] will consider the approval of $6 billion loan for Pakistan today (Wednesday).

As per details, Pakistan and the IMF have already agreed on the deal at their staff level and the government claims that the IMF conditions for approval of the loan have been met and it is expected that the board will approve the loan. If approved, the IMF would expectedly release the first tranche of $500 million in the current month.

'IMF programme aimed at reducing Pakistan's public debt'

However, sources say that the IMF has also advised Pakistan to review the formula for collection of revenues under the National Finance Commission (NFC) award, including an increase in the share of federal government.

The IMF has also advocated integration of taxes collected by the government. The requisite conditions come as a challenge for Pakistan as its parliament would need to amend the 18th Amendment while Sindh strongly opposes any move in this regard.

Sources say that Pakistani government will also have to ensure the IMF about the rollover of financial aid promised by friendly nations. However, this would not be a big deal as the friendly countries continue to extend their support to Pakistan, said the sources, adding that there was a strong chance that the IMF would approve the loan for the country.

Pakistan has already made alternative financial arrangements for debt servicing in case the IMF approval is deferred to the next meeting.

If IMF grants approval to $6 billion loan, Pakistan will also be able to procure up to $3 billion in aid and financing from the World Bank and the Asian Development Bank (ADB) to help control its financial crisis.