Covid-19 funding

There might be some economic relief on the horizon as the IMF) is now saying that it would consider a request from Islamabad for financial assistance to help combat the impact of the Covid-19 coronavirus pandemic on the economy. Pakistan had asked for assistance under the IMF’s Rapid Financing Instrument (RFI) facility to help enhance foreign exchange reserves and allow for some budgetary support.

The IMF previously announced that it would support vulnerable countries with different lending options, including rapid-disbursing emergency financing from a pool of $50 billion for low-income and emerging markets. Around $10 billion of this has been set aside for the Rapid Credit Facility (RCF) which would provide interest-free loans to the poorest members countries. Pakistan’s additional financing request is not being considered through the RCF.

Although Pakistani officials have not given specifics about how much money has been requested or what exactly it will be used for, the IMF has said such funds are meant to allow governments to address urgent balance of payments needs and support policies to strengthen social protection nets, healthcare, and pay stipends to daily-wage earners.

The United States too has put Pakistan on a list of high-priority countries that will receive American aid to help combat Covid-19. Afghanistan, Bangladesh, Indonesia, Kazakhstan, Thailand, Burma, and Uzbekistan are also on the list. These countries will receive funds from a $274 million pool the US has set up to help them with their coronavirus responses.

Both sources of funding are clearly needed, but they also force a question concerning the government’s austerity measures. Pakistan always had a weak healthcare system, but the austerity measures and budget cuts only served to further choke it. No matter how much praise the IMF has for the government’s reform efforts, the fact remains that the healthcare system has actually suffered since the 2018 elections and the subsequent budget cuts. This funding might help us through the coronavirus pandemic, but we will return with a begging bowl the next time there is a disease outbreak. The only way to address that is to invest in the healthcare sector. 

Published in The Express Tribune, March 31^st, 2020.

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