Pakistan has requested the International Monetary Fund (IMF) for financial assistance under the Rapid Financing Instrument (RFI), which will allow the government to address additional and urgent balance of payments needs and support social protection, daily-wage earners, and the healthcare system.
This was stated by Kristalina Georgieva, Managing Director of the IMF, in a statement issued on Pakistan.
The IMF official stated, "The authorities have continued their reform efforts to address Pakistan's economic challenges, but progress is being threatened by the devastating effects of the COVID-19 outbreak and the deterioration in global economic and financial conditions.
"Prime Minister Khan and his government have swiftly approved an economic stimulus package aimed at containing the spread of the virus and providing support to affected families and businesses. Similarly, the State Bank of Pakistan has adopted a timely set of measures, including a lowering of the policy rate, new refinancing facilities to support the flow of credit, and temporary regulatory relief measures.
"To support these efforts and ensure prompt and adequate relief to the people and the economy, the Government of Pakistan has requested financial assistance under the Fund's Rapid Financing Instrument (RFI). This emergency financing will allow the government to address additional and urgent balance of payments needs and support policies that would make it possible to direct funds swiftly to Pakistan's most affected sectors, including social protection, daily wage earners, and the healthcare system. Our team is working expeditiously to respond to this request so that a proposal can be considered by the IMF's Executive Board as soon as possible.
"In parallel, the authorities have reaffirmed their commitment to the reform policies included in the current arrangement under the Extended Fund Facility (EFF). These reforms are crucial to boost Pakistan's growth potential to deliver broad based benefits for all Pakistanis, especially the most vulnerable segments of the population.
"The Fund stands ready to continue to support the authorities' efforts to implement much-needed economic and structural reforms aimed at fostering strong and sustainable growth," Kristalina Georgieva added.
The IMF has announced $50 billion through its rapid-disbursing emergency financing facilities for low-income and emerging market countries that could potentially seek support. Of this, $10 billion is available at zero interest for the poorest members through the Rapid Credit Facility (RCF).
Financial assistance provided under the RFI is subject to the same financing terms as the Stand-By Arrangement (interest rates are currently about 11/2 percent), and should be repaid within 31/4 to 5 years. Members have used this facility five times - for instance, in 2016, the IMF provided an RFI emergency loan to Ecuador after one of the strongest earthquakes in decades, according to information available on the IMF website.