KARACHI: Capital market investors, traders, and researchers have termed the immediate release of funds by the International Monetary Fund (IMF) for Pakistan a timely and uplifting development for the economy amidst the COVID-19 slowdown.
The International Monetary Fund (IMF) on Thursday approved the immediate disbursement of $500 million for Pakistan. After reviewing Pakistan’s reform program supported by the IMF Extended Fund Facility, the Fund’s Executive Board approved the immediate disbursement of about US$500 million for budget support.
“The development extends confidence in the economy,” Khurram Schezad, CEO of Alpha Beta Core said in a phone interview from Karachi. “For investors, the amount of fund is of secondary importance, while the decision by such a reputed institution reflects hope and confidence in the economy. That is important for all.”
The IMF board has extended support for Pakistan after completing its analysis and review, which reaffirms the individual estimates by investors, he added.
The Executive Board of the International Monetary Fund (IMF) today completed the second through fifth reviews of the Extended Arrangement under the Extended Fund Facility (EFF) for Pakistan. The Board’s decision allows for an immediate disbursement of SDR 350 million (about US$500 million), bringing total purchases for budget support under the arrangement to about US$2 billion.
“Other than the IMF news, there are two other very positive developments today in Pakistan’s international, political, and defence standing,” an investor said, with the request of anonymity. “Today’s top good news was about the IMF fund, but the United State’s statement regarding China and its allies’ relation, and President Alvi’s statement on Pakistan’s defence also added to investors’ confidence.”
During an address at the NATO headquarters in Brussels, United States Secretary of State Antony Blinken said that the US would not force its allies into an “us or them choice” with China.
Meanwhile, President Arif Alvi, while addressing the Pakistan Day parade today, said that Pakistan has progressed as a nation and is now “self-sufficient” in its defence. The president lauded the country’s armed forces for their efforts in alleviating terrorism, natural disasters, and the current pandemic.
“Unlike only numbers, these comments mean a lot for investors—especially the international investors’ community,” Muzammil Aslam, Economist, CEO of Tangent Capital Advisory said. “Many of them rely on IMF’s statements about the economy to foresee the potential of growth.”
Following the Executive Board discussion on Pakistan, Ms Antoinette Sayeh, deputy managing director and acting chair, issued the statement saying Pakistani authorities have continued to make satisfactory progress under the fund-supported program, which has been an important policy anchor during an unprecedented period. While the COVID-19 pandemic continues to pose challenges, the authorities’ policies have been critical in supporting the economy and saving lives and livelihoods.
The authorities have also continued to advance their reform agenda in key areas, including on consolidating central bank autonomy, reforming corporate taxation, bolstering management of state-owned enterprises,
and improving cost recovery and regulation in the power sector, she added.
