Twin tranches: IMF approves release of $1.1 billion for Pakistan
In rare move, fund’s directors express condolences over Tuesday’s horrific attack in Peshawar
ISLAMABAD:
The International Monetary Fund on Wednesday approved the release of $1.1 billion to Pakistan, helping the country cross the psychological barrier of having total foreign currency reserves of over $15 billion for the first time in two and half years.
The decision to approve two combined loan tranches worth $1.1 billion was taken by the Executive Board of the IMF in a meeting held in Washington. The approval was already anticipated, as the government had met all the prior actions till the November 30 deadline.
In an unusual move, the IMF’s directors unanimously expressed their condolences to people of Pakistan over loss of life in the Peshawar terrorist attack. Given the non-political nature of the institution, the IMF usually does not comment on such developments.
“The IMF directors (were) united in expressing deepest condolences to the people of Pakistan for the loss of innocent life in the horrific attack yesterday,” said Jeffery Franks, the IMF’s Washington-based Mission Chief to Islamabad.
Pakistan and the IMF entered the three-year Extended Fund Facility amounting to $6.6 billion in September last year aimed at introducing critical reforms to stabilise economy and avoid default on international payments.
On Wednesday, the IMF Board approved the fourth (April-June period) and fifth (July-September period) reviews of the economy, clearing the last hurdle in the way of release of the $1.1 billion. To clear the two reviews, the IMF had to grant five waivers on conditions that the government failed to fulfill. It was one of the highest ratios of waivers, granted by the IMF in any review, indicating the government’s inability to introduce critical reforms.
Earlier in August, Pakistan and the IMF could not successfully conclude the fourth review due to the government’s inability to meet many conditions.
With release of $1.1 billion, the country’s total foreign currency reserves would cross $15 billion. In June 2012, Pakistan had total foreign currency reserves of $15.2 billion, which then started gradually depleting due to use of reserves to defend the sliding rupee and drying up foreign inflows in last year of the PPP government.
Currently, the country’s total foreign currency reserves are at $13.922 billion including $9.203 billion held by the central bank. With the fresh injection of $1.1 billion, the SBP’s reserves would increase to $10.1 billion –a level also last time witnessed in June 2012.
Published in The Express Tribune, December 18th, 2014.
The International Monetary Fund on Wednesday approved the release of $1.1 billion to Pakistan, helping the country cross the psychological barrier of having total foreign currency reserves of over $15 billion for the first time in two and half years.
The decision to approve two combined loan tranches worth $1.1 billion was taken by the Executive Board of the IMF in a meeting held in Washington. The approval was already anticipated, as the government had met all the prior actions till the November 30 deadline.
In an unusual move, the IMF’s directors unanimously expressed their condolences to people of Pakistan over loss of life in the Peshawar terrorist attack. Given the non-political nature of the institution, the IMF usually does not comment on such developments.
“The IMF directors (were) united in expressing deepest condolences to the people of Pakistan for the loss of innocent life in the horrific attack yesterday,” said Jeffery Franks, the IMF’s Washington-based Mission Chief to Islamabad.
Pakistan and the IMF entered the three-year Extended Fund Facility amounting to $6.6 billion in September last year aimed at introducing critical reforms to stabilise economy and avoid default on international payments.
On Wednesday, the IMF Board approved the fourth (April-June period) and fifth (July-September period) reviews of the economy, clearing the last hurdle in the way of release of the $1.1 billion. To clear the two reviews, the IMF had to grant five waivers on conditions that the government failed to fulfill. It was one of the highest ratios of waivers, granted by the IMF in any review, indicating the government’s inability to introduce critical reforms.
Earlier in August, Pakistan and the IMF could not successfully conclude the fourth review due to the government’s inability to meet many conditions.
With release of $1.1 billion, the country’s total foreign currency reserves would cross $15 billion. In June 2012, Pakistan had total foreign currency reserves of $15.2 billion, which then started gradually depleting due to use of reserves to defend the sliding rupee and drying up foreign inflows in last year of the PPP government.
Currently, the country’s total foreign currency reserves are at $13.922 billion including $9.203 billion held by the central bank. With the fresh injection of $1.1 billion, the SBP’s reserves would increase to $10.1 billion –a level also last time witnessed in June 2012.
Published in The Express Tribune, December 18th, 2014.