Pakistan, burdened with debt, has received another relief from the International Monetary Fund (IMF). The International Monetary Fund has released a new tranche of $1.2 billion, approving the country’s latest review. Pakistan had recently narrowly escaped defaulting due to economic mismanagement and a huge decline in foreign exchange reserves. This installment of IMF will provide it temporary support, but in return, fulfilling the conditions like strict financial reforms and privatization of government companies can prove to be a big challenge for Pakistan. This decision of the Executive Board of the International Monetary Fund (IMF) not only keeps Pakistan’s IMF program on track, but will also help it deal with its serious economic challenges.
How much amount was released?
The IMF Board approved the release of $1 billion under Pakistan’s $7 billion Extended Fund Facility (EFF) and $200 million under the Resilience and Sustainability Facility (RSF). This brings the total disbursement so far under both programs to approximately $3.3 billion. The IMF said in the statement that in an uncertain global environment, it is necessary for Pakistan to maintain cautious policies to strengthen macroeconomic stability and accelerate reforms to achieve private sector-led sustainable growth in the medium term.
Large scale privatization started in Pakistan
Under the terms of the IMF program, Pakistan is also working on its first major privatization process in nearly two decades. Prime Minister Shehbaz Sharif said last week that the auction of majority stake in Pakistan International Airlines (PIA) would be held on December 23. Four groups have been shortlisted to participate in this sale. Pakistan has guaranteed to the IMF that it will continue the following reforms. These include increasing revenues and maintaining a tight monetary policy and pursuing privatization of government companies and taking strong steps to deal with climate-induced disasters such as the recent floods.
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