News
Friday, September 03, 2010
IMF extends $450m in urgent aid for Pakistan* MD says talks on how to ‘reorganise’ $11bn loan programme will continue
* Islamabad committed to tax, energy sector reforms
Staff Report
ISLAMABAD: The International Monetary Fund (IMF) announced on Thursday that it will provide over $450 million in new emergency financing to Pakistan to help it cope with the economic impact of floods.
“This natural disaster will have an important effect on the country’s economy. It has caused serious damage to the country’s infrastructure, severely impacted its economic outlook, and resulted in a worsening of the fiscal situation,” said IMF Managing Director Dominique Strauss-Kahn. “In response to this, I will ask the IMF board to approve $450 million in emergency assistance to be made available this month,” he said.
The emergency financing, which is subject to approval by the IMF’s Executive Board, would be provided under the IMF’s policy for Emergency Natural Disaster Assistance. The funds are expected to be disbursed later this month.
The Pakistani delegation, led by Finance Minister Abdul Hafeez Shaikh, met with IMF staff and management in Washington during the past week to discuss the disaster’s implications for the budget and long-term growth targets.
Strauss-Kahn said discussions with the Pakistani delegation on how to “reorganise” an $11 billion IMF loan programme would continue. He said Islamabad remained committed to terms including tax and energy sector reforms.
“Our dialogue with Pakistan on the current stand-by arrangement is progressing and the authorities have expressed their intention to implement measures for the completion of the fifth review of the programme later this year. We will stay in close contact as these efforts proceed. Completion of the fifth review will allow the fund to disburse an additional $1.7 billion, bringing the total IMF disbursements (including emergency assistance) to $2.2 billion in the second half of 2010,” Strauss-Kahn said.
He said Islamabad remained committed to terms including tax and energy sector reforms.
Given the disaster’s impact, however, some of the parameters of the existing programme may need to be changed, according to Masood Ahmed, the IMF’s Middle East and Central Asia Department director.
“The economic impact is going to be very significant,” Ahmed said. “The floods will lower growth and will affect the government’s budget because Pakistan would have to spend more and it would be able to raise less revenue,” he said.
Courtesy www.dailytimes.com.pk