Pakistan receives $1.39 billion under Rapid Financing Instrument

This undated file photo shows premises of the State Bank of Pakistan. (Shutterstock)

• The money will help address urgent balance of payments needs of the country amid the COVID-19 pandemic
• The IMF and the SBP have already projected negative 1.5 percent growth for Pakistan due to the virus and ensuing lockdowns

KARACHI: Pakistan on Wednesday received $1.39 billion from the International Monetary Fund (IMF) under the Rapid Financing Instrument (RFI) to meet the balance of payments needs emerging from the outbreak of coronavirus, the State Bank of Pakistan (SBP) confirmed.
The central bank announced the development in a Twitter post earlier in the day.
Pakistan has been battling to contain the viral outbreak and its economic fallout since the last week of February when it reported its first COVID-19 case. The government subsequently reached out to the IMF to secure financial assistance to deal with a likely reduction in exports and remittances.
“We expect that IMF’s emergency financing will catalyze additional support from donors as we remain actively engaged with them to raise the necessary financing to close the [balance of payments] gap and protect our international reserves,” Special Assistant to Prime Minister on Finance Dr. Abdul Hafeez Shaikh wrote to the Fund’s managing director, Kristalina Georgieva, in the beginning of the month.
Meanwhile, the IMF said it remained closely engaged with Pakistan.
“The IMF support will help to provide a backstop against the decline in international reserves and provide financing to the budget for targeted and temporary spending increases aimed at containing the pandemic and mitigating its economic impact,” the Fund said in a statement issued on Wednesday.
Pakistan is also expected to get debt relief from G20 creditors as the country experiences massive economic slowdown and has reported more than 10,000 confirmed COVID-19 cases with over 210 deaths.
The IMF and the SBP recently predicted that the country’s economic growth would be negative 1.5 percent during this fiscal year, FY20.
On Wednesday, the governor of the central bank, Dr Reza Baqir, said the lockdowns had led to a sharp decline in growth and an improvement in the inflation outlook.
The governor reiterated during a briefing conducted through video conferencing that the SBP was determined to protect the economy with all the tools available to it and would prudently respond to the COVID-19 crisis in coordination with international financial institutions.
Pakistan has already availed a $6 billion loan program under which the country has so far secured $1.44 billion since July 2019. However, the, program has been put on hold.
Maria Teresa Daban Sanchez, IMF’s Resident Representative in Pakistan, said on Monday that the “ongoing existing fund facility (EFF) program is very much intact.”
“IMF is working closely with the authorities in Pakistan and the next review mission may take place virtually,” she said while speaking at an online policy dialogue organized by the Sustainable Development Policy Institute (SDPI) in Islamabad.