IMF postpones approval of second tranche of loan package to Pakistan
The IMF has postponed its second review—scheduled for today—for approving a $6 billion bailout program for Pakistan. The bailout was to aid repayments of loans worth $12.2 billion to lenders China, Saudi Arabia and the UAE.
Pakistan last month requested $1.4 billion worth of funds under the Rapid Financing Instrument facility (RFI)—a service designed for rapid and low-access financial assistance to member countries facing urgent balance of payments needs. COVID-19 has had an immediate adverse impact on Pakistan’s strained resources, forcing Islamabad to divert funds and personnel from security and administration towards combating the infection. The RFI is intended to supplement the country’s budgetary resources and its foreign reserves.
The IMF approved the loan yesterday and has indicated this to be the reason behind the EFF approval delay.
The RFI funds are supposed to be oriented towards specifically aiding the COVID-19 efforts. Thus, these are likely to provide a only short to medium term relief to the country. Since the IMF has not provided any further review approval date for the EEF, Islamabad is unlikely to receive these funds in the immediate future. Its multilateral loan obligations will thus remain unfulfilled for some time.
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