The International Monetary Fund has offered to Pakistan money upfront with no strings attached for earthquake relief, says Fund''s Resident Representative Henri Lorie.
In a letter to Business Recorder, the Fund''s Senior Resident Representative in Islamabad assured that Pakistan will not be placed on ''Post-Programme Monitoring'' by the International Monetary Fund, in case it avails itself of IMF Emergency Assistance facility.
He confirmed that the emergency facility has been offered by the Fund for earthquake relief and reconstruction effort amounting to $370 million at a highly concessional interest rate of 0.5 percent.
In the letter to Business Recorder the Resident Representative says:
"The Business Recorder''s editorial of today, October 24, entitled ''No, thank you, IMF'' contains several inaccuracies regarding the possible IMF financial assistance to Pakistan in support of the earthquake relief/reconstruction effort. I thought that I should set the record straight.
"First, Pakistan is indeed eligible to receive about $370 million under the IMF Emergency Assistance facility for natural disasters. Turkey (earthquake, 1999) and Sri Lanka (tsunami, 2004), among other countries, availed themselves of this facility after similar tragedies.
"Second, disbursements under this IMF Emergency Assistance are under Poverty Reduction and Growth Facility (PRGF) terms, carrying a highly concessional interest rate of only 0.5 percent.
"Third, no policy conditionality is attached to disbursement under the IMF Emergency Assistance. Such disbursement would be up-front (one tranche), without IMF review either.
"Fourth, there is no linkage between disbursement under the IMF Emergency Assistance and any post-programme monitoring (PPM) arrangement. At the conclusion of the successful PRGF programme with Pakistan last year, the Management of the IMF agreed that there was no need for such a PPM arrangement in the case of Pakistan. This assessment would not change.
"During his visit to Pakistan early last week, the IMF Managing Director, Rodrigo de Rato, offered IMF financial assistance under its Emergency Assistance facility under the terms described above. It is my understanding that the Pakistani authorities are considering this offer, based on an assessment of relief/reconstruction needs and impact, if any, on the budget and the balance of payments, and ability of other bilateral and multilateral donors to meet the financing requirements according to their areas of specialty."
Lorie also clarified that Turkey was in a Fund Programme arrangement in 1999, while availing itself of the emergency facility. As such, its economy was already being monitored by the Fund. However, in case of Sri Lanka, after tsunami, there was no linkage of emergency assistance with any kind of monitoring. Therefore, there should be no implications for Pakistan as well, he added.