Pakistan can repay China’s loans while staying in the IMF program
Pakistan will repay its loans from China while staying in the International Monetary Fund (IMF) programme, IMF Resident Representative Teresa Daban Sanchez told Pakistan on Monday.
Speaking to a seminar, Sanchez said the world is facing a range of challenges due to the coronavirus pandemic; the IMF has given $50 billion globally to tackle the effects of COVID-19.
She said Pakistan has taken timely steps to counter coronavirus. Monetary changes and steps had been taken prior to the coronavirus crisis. Sanchez said the economy of the country was slowly improving after the IMF programme, while the tax revenues of Pakistan were also rising.
However, she informed, Pakistan’s economic growth rate is expected to decline due to the impact of the coronavirus. The inflation rate this fiscal year is forecast to remain at 11.3 per cent. Pakistan’s spending could rise by up to Rs700 billion, while the country’s tax receipts are expected to fall by Rs900 billion.
The IMF Resident Representative further said the IMF has no interest in Pakistan’s decision on petroleum prices. Whether the government raises the tax on petroleum, it is their prerogative.
Sanchez told that the IMF did not allow Pakistan to delay its loan payments.
Speaking of Pakistan’s electricity sector, Sanchez said the authorities needed to implement reforms in this critical field, improve management, reduce line losses and increase their output.
It is important to inform that the IMF’s Executive Board approved a purchase of Pakistan under the Rapid Financing Instrument (RFI) equal to US$ 1,386 billion in SDRs to meet the urgent balance of payment needs resulting from the COVID-19 pandemic outbreak.
“The outbreak of COVID-19 is having a significant impact on the Pakistani economy. The domestic containment measures, coupled with the global downturn, are severely affecting growth and straining external financing. This has created an urgent balance of payments need,” said Geoffrey Okamoto, First Deputy Managing Director, and Acting Chair.
“In this context of heightened uncertainty, IMF emergency financing under the Rapid Financing Instrument provides strong support to the authorities’ emergency policy response, preserving fiscal space for essential health spending, shoring up confidence, and catalyzing additional donor support,” he added.
