- Economic crisis - global security - IMF - Islamabad - Pakistan
AFP - The International Monetary Fund on Monday said it would lend roughly 847 million dollars to Pakistan as part of an emergency loan to help support the country's economic stabilization program.
The IMF said its board approved the payment after a first review of Pakistan's economic performance under a program supported by a 7.6-billion-dollar line of credit agreed late last year.
The 23-month Stand-By Arrangement (SBA) announced on November 24 was approved under the IMF's fast-track Emergency Financing Mechanism procedures.
"Pakistan's economy is gradually recovering from the macroeconomic and external imbalances of 2007-2008," Murilo Portugal, IMF deputy managing director, said in a statement.
"Policy steps taken by the authorities under the SBA-supported stabilization program, which aims at restoring financial stability while protecting the poor, have been instrumental in this regard," he said.
The IMF said the sharply deteriorating global economy had forced it to revise downward Pakistan's near-term growth outlook.
Adnan Mazarei, IMF's mission chief for Pakistan, said in a conference call that for the 2008-2009 fiscal year that begins in June, the growth forecast was slashed to 2.5 percent from a prior estimate of 3.5 percent.
The growth forecast for 2009-2010 was lowered to 4.0 percent from 5.0 percent.
"But the risks are considerable," he warned, and growth "likely may be lower."
Pakistan immediately received 3.1 billion dollars in the first tranche of the standby loan, with subsequent payments dependent on Islamabad fulfilling targets set by the IMF.
The line of credit is designed to support a tightening of macroeconomic policies to restore stability and to ensure social stability and adequate support for the poor and vulnerable in Pakistan, IMF officials said.
The latest disbursement brings the total amount disbursed to 3.93 billion dollars, the IMF said.
"The program is firmly on track," Portugal said. "The end-December fiscal deficit target, which proved challenging, was achieved through a combination of revenue and expenditure measures. The authorities also made good progress toward addressing the circular debt problem in the energy sector."
In addition, the IMF signaled progress in expanding the Benazir Income Support Program to provide targeted cash transfers for poor households.
"Banks have weathered the crisis well, but need to continue to be monitored carefully as the worsening macroeconomic environment may affect banks' asset quality and profitability," Portugal said.
The IMF also announced board approvoal of Pakistan’s request for a waiver for restrictions on imports on "a few items," especially in the auto industry, Mazarei told reporters. The waiver was granted because "they will remove them by June."
The IMF appealed to the international community to commit new aid to Pakistan at next month's donor conference in Japan.
"Pakistan needs additional external assistance to reduce risks, and provide for greater development and social spending. The upcoming donor meeting provides an important opportunity for mobilizing additional assistance," Portugal said.
Japan will host a donors' meeting for Pakistan on April 17 to be attended by Pakistani President Asif Ali Zardali and US envoy to Pakistan Richard Holbrooke, according to Japanese officials.
The World Bank will co-chair the meeting aimed at "helping Pakistan address its difficult challenges, such as economic reform and the fight against terrorism," Japan's foreign ministry said in announcing the meeting.