Pakistan seeks additional $1.4 bn from IMF to fight COVID-19

In this file photo, the International Monetary Fund (IMF) building sign is viewed in Washington DC on April 5, 2016. (AFP)

• PM’s adviser on finance says the additional funding will have no conditions attached to it
• Pakistan also wants $60 million from the World Bank and the Asian Development Bank to mitigate the economic impact of coronavirus

KARACHI: Pakistan is seeking additional $2 billion from the International Monetary Fund (IMF), World Bank (WB) and Asian Development Bank (ADB) to mitigate the economic impact of lockdowns across the country that have been imposed to prevent the spread of coronavirus, economic managers of the South Asian country announced on Wednesday.
“The talks are underway with the IMF for additional $1.4 billion on a fast-track basis,” Dr. Abdul Hafeez Shaikh, Adviser to the Prime Minister on Finance, said in Islamabad while briefing the media on the economic stimulus package announced by the government on Tuesday.
“The amount is separate from the current program and no new conditions will be attached to it,” he continued.
Pakistan has already signed a three-year Extended Fund Facility (EFF) with the IMF that amounts to $6 billion and has so far secured $1.44 billion under the loan program since July 2019. The country is expecting another tranche of about $450 million next month.
Hammad Azhar, Minister for Economic Affairs, who also accompanied the finance minister during the media interaction informed that the country was also negotiating with the World Bank and the ADB for additional $60 million to wage the war against the pandemic.
Prime Minister Imran Khan on Tuesday announced a Rs 1.2 trillion relief package, the largest ever economic stimulus in the country’s history. The announcement was made to mitigate the negative impact of coronavirus on the nation’s economy and protect the financial interests of the vulnerable segments of the society.
The minister said the Rs 200 billion relief had been announced for daily wage workers that would help mitigate the impact of the lockdown on the lives of poor people.
Khan’s relief package includes Rs 190 billion for emergency response, Rs 25 billion for the National Disaster Management Authority, Rs 50 billion for medical workers, Rs 100 billion for emergency funds, Rs 15 billion for tax relief on food and health items, Rs 570 billion for relief to citizens, Rs 150 billion for relief to vulnerable families and strengthening the government’s shelter program for the poor, and Rs 480 billion to support business and economy, according to the details issued by the Ministry of Finance on Wednesday.
However, Shaikh said that the country was expecting a fall in the remittances and tax collection due to the slowing economic activity. He also indicated that the government was immediately going to release export refunds to ensure liquidity and help the export industry.
“Refunds worth Rs 100 billion would be immediately released to support our export industry. Besides, Rs 100 billion would be released to support small and medium enterprises and the agricultural sector,” Shaikh added.
He added that the government was giving incentives to the country’s capital markets and announced to eliminate the Capital Value Tax (CVT) on capital market transactions.
Despite the government’s relief package, Pakistan’s stock market on Wednesday declined by 4.7 percent. During the last two consecutive sessions, the benchmark KSE 100 index dropped by 11.3 percent. The government has also restricted speculative trading (short selling) in the stock market.
“The State Bank of Pakistan (SBP) has slashed the policy rate by 2.25 percent,” Shaikh said, referring to the central bank’s Tuesday’s decision of slashing key interest rate by another 150 basis points to 11 percent.