Pak seeks additional $1.4b from IMF

World Bank to provide $1b and ADB pledges $350m immediately and $950m after three months

ISLAMABAD - Pakistan has decided to seek additional $1.4 billion from International Monetary Fund (IMF) on fast track distribution amid prevailing coronavirus crisis in the country.

Prime Minister’s Adviser on Finance and Revenue Abdul Hafeez Shaikh said Pakistan was engaged in talks with the IMF for an additional $1.4 billion on easier terms and conditions. “This sum [of additional money] is separate from the current programme”, Shaikh said, referring to the ongoing three-year IMF Extended Fund Facility (EFF) worth $6 billion. He also clarified that additional $1.4 billion is not part of the IMF’s announcement of $50 billion to deal with COVID-19.

Addressing a press conference along with other cabinet members, he informed that World Bank would provide $1 billion and the Asian Development Bank had announced $350 million immediately and further $950 million in June this year.

He said that Pakistan’s economy was growing stronger but the COVID-19 pandemic was expected to dent it considerably. Sharing details of economic situation before pandemic, he said that tax collection was improving, exports were increasing and current account deficit was declining. The federal government had transferred more funds to the province due to the improved economic situation. However, the economic situation would be adversely affected due to coronavirus as remittances were likely to fall, as was the tax collection, and a slowdown in the economic activity throughout the country was imminent.

Adviser said Prime Minister Imran Khan had announced Rs 1,200 billion package for the economy to mitigate the impact of the COVID 19 virus on economic activity and vulnerable segments of the society. Sharing details, he said Rs200 billion were allocated for the labour class whose jobs were on risk due to the lockdowns, around Rs100 billion had been kept to provide liquidity to the export industry as tax refunds. He said Rs100 billion had been earmarked to facilitate farmers and small factory owners, while Rs150 billion would be spent to provide financial assistance of three thousand rupees to 12 million families across Pakistan for four months. Around Rs50 billion was allocated for Utility Stores to provide grocery items at subsidized rates.

Hafeez Shaikh said an additional amount of Rs50 billion was allocated to procure protective gear and other necessary equipment. National Disaster Management Authority (NDMA) was to get Rs25 billion to fight the pandemic, he said.

The Adviser informed that oil prices would not be increased from existing level for the next few months instead it might be further reduced. He said that the government had also given facility to pay the electricity and gas bills in three installments. He said tax on edible items was either completely abolished or massively reduced to facilitate vulnerable segments of society. The government has allocated Rs82 billion to procure 8.2 million tons of wheat from the farmers, he added.

The Adviser informed that government has taken measures to support the capital markets that included elimination of capital value tax (CVT) on capital market transactions. “There would a reduction in the prices of fertilisers and we will also subsidise through other ways,” he said, adding that smalls businesses would be granted loans at affordable interest rates. Shaikh admitted that government had not allocated additional amount for Ehsas programme. He said that government had allocated Rs192 billion for Ehsas programme in the budget. However, around, Rs50-Rs60 billion had spent in nine months of the current fiscal year and the remaining would be spent in next few months.

Secretary Finance informed the media that government would control the budget deficit during the current fiscal year, although, it was too early to predict the budget deficit. He said that IMF had given relaxation to Pakistan by excluding the government expenses pledged to counter the corona virus from the budget deficit.

Federal Minister for Economic Affairs Hammad Azhar informed that World Bank and Asian Development Bank would jointly give fresh $600 million to Pakistan for COVID-19 and remaining would be diverted from slow moving projects. In next stage, the government would seek budgetary support from these institutions.

Prime Minister Assistant on Petroleum Nadeem Babar said that government would completely revise the oil pricing fixing formula. A summary in this regard would be moved to Economic Coordination Committee of the Cabinet.

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