ISLAMABAD: Pakistan has agreed to borrow $7.6 billion from the International Monetary Fund (IMF) to stave off a balance of payments crisis.
“This (bailout) is part of a broader package that includes financing from other multilateral institutions and regional development banks,” said IMF Managing Director Dominique Strauss-Kahn.
Shaukat Tarin, finance adviser to Pakistan’s prime minister, said the formalities should be concluded next week. “We are expecting it this month,” he told a news conference in Karachi when asked when the first tranche might arrive. “We have requested IMF to give as much as they can.”
The interest rate on the credit facility would vary between 3.51 and 4.51 percent with changes according to market conditions, and would be payable between 2011 and 2016, Tarin said.
The IMF did not disclose details. But it said the credit under its emergency funding facility would be tied to Pakistani economic reforms, including higher official interest rates and tighter fiscal policies, plus a well-funded social safety net to protect the poor.
Pakistan expects the World Bank and other lenders to step forward with several billion dollars of additional loans, and steadfast ally China to pitch in with $500 million. But other multilateral lenders and friendly governments were waiting for the IMF accord before acting, in order to bring some discipline to Pakistan’s economic management.
The rupee has lost 23 percent in value against the dollar since the start of the year, and foreign investors have fled a stock market which is down around 35 percent.
— With input from agencies
