IMF PACKAGE FOR PAKISTAN
On 24th November, 2008, Pakistan received a $ 7.6 billion bailout package from IMF in order to overcome its economic crisis. The package comprised of a 23-month programme allowing for transfer of $ 7.6 billion in six quarterly instalments. Pakistan is required to pay an interest of 3.15 percent to 4.15 percent on the money it has borrowed from IMF. According to the package, the IMF will immediately transfer $ 3.1 billion to Pakistan’s account in New York Federal Reserve to help Islamabad avoid defaulting c its debt repayments. Thus, Pakistan would be able to raise up to $ 8.8 billion during the institutions and other sources. The amount includes direct investment of about $4.5 current fiscal year through medium and long-term borrowing from multilateral the views of experts, Pakistan’s gross external financing requirements for the financial billion. The remaining gap of $ 4.7 billion would be filled by IMF in year 2008–09. In year ending on 30th June, 2009, would be $ 13.4 billion while the financial requirements by 30th June, 2010, amount to $ 12.2 billion.
IMF Package a Signal to Donors:
According to IMF Deputy Managing Director Takatoshi Kato, the $ 7.6 billion package had strengthened the economic position of Islamabad. He declared, signal to the donor community about the country’s improved macroeconomic prospects. “By providing large financial support to Pakistan, the IMF is sending a strong The programme aims at restoring the confidence of the domestic and foreign investors with a tightening of fiscal and monetary policies while maintaining social stability through targeted spending.”
Get Feet Heet’s stories in your inbox
Join Medium for free to get updates from this writer.
IMF Conditionalities & The Compliance:
After the approval of the package, IMF Mission Chief in Pakistan Juan Carlos Di Tata said that most of the adjustments for reducing fiscal deficit would come from eliminating fuel and electricity subsidies and by eliminating exemptions on income and agriculture taxes.Pakistan government has already withdrawn fuel subsidies while its efforts to increase electricity rates caused widespread protests. IMF has assured that the transfers and targeted electricity subsidies. However, it has not asked Pakistan to reduce defence spending because it was for the government to decide how it wanted to bring down its expenditure. The regular monitoring of the economy will show how the macroeconomic objectives set by the government are being met and whether they need to
on social safety net will be increased to protect the poor through both cash
be adjusted.
