Pakistan, IMF agree on $5.3 billion loan facility

Pakistan and IMF Thursday agreed for a 3-year programme of at least 5.3 billion dollars under the Extended Fund Facility. Officials said.

Pakistan Finance Minister Ishaq Dar and Head of the IMF Mission Jeffrey Franks told a news conference in Islamabad they have agreed on 5.3 billion dollars loan facility but Pakistan has requested for 7.3 billion dollars and that the cash flows from the IMF should match Pakistan’s loan repayment obligations towards the Fund.

Dar said it is a long-term loan facility carrying 3 percent interest rate, adding the agreement has paved the way for the programme to be presented to Management and finally to the Board of Executive Directors of the IMF in the first week of September this year.

He said fresh loan from the IMF is being sought to repay the huge loans that the previous Government obtained from the Fund.

Asked as to why Pakistan is going again to IMF despite pledges by the leadership to break the begging bowl‚ the Finance Minister said the new programme is aimed at retiring past liabilities as “we cannot afford to default on our repayments.”

IMF Mission Chief Jaffrey Franks said the mission has reached a staff-level agreement with the authorities on the key elements of an economic reform programme that is strongly owned by Pakistan and that can be supported by a three year arrangement.

“Pakistan faces a challenging economic outlook‚ compounded by an uncertain global and regional environment. Macroeconomic imbalances have combined with longstanding structural problems‚ particularly in the energy sector‚ to sap the country’s growth potential,” he said.

He said a determined effort is required to improve medium-term growth and move towards sustainable fiscal and external positions.

The IMF Mission Chief lauded Pakistan’s new budget which he said is an important step in the right direction and the Government has agreed to complement this with additional steps to achieve a substantial deficit reduction at the beginning of the programme.

“The mission and the authorities have agreed on the need for a sustained improvement in tax collections as well as a significant widening of the tax base.”

Mr. Jaffrey expressed the confidence that after agreement with the IMF‚ other multilateral institutions like World Bank and Asian Development Bank would come forward to help Pakistan implement its home grown economic programme.

Replying to a question the Finance Minister said subsidies on electricity would be phased out but the poor would be protected.

Short URL: https://www.newspakistan.pk/?p=40806

Posted by Tahir Khan on Jul 4 2013. Filed under Business, Latest News, National, Pakistan. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.