Pakistan receives $1.39 bn loan from IMF to deal with coronavirus crisis

Cash-strapped Pakistan has received an emergency loan of $1.39 billion from the International Monetary Fund (IMF) to boost its foreign exchange reserves in the wake of the coronavirus crisis.
The $1.39 billion loan is in addition to the $6 billion bailout package that Pakistan had signed with the IMF in July last year to stave off a balance of payment crisis. "SBP (State Bank of Pakistan) has received $1.39 billion under the Rapid Financing Instrument (RFI) from the IMF," the central bank said in a tweet on Wednesday.
Pakistan in March had requested the global moneylender for a low-cost, fast-disbursing loan under its Rapid Financing Instrument (RFI) to deal with the adverse economic impact of the pandemic. The RFI is used to provide financial assistance to IMF member countries facing an urgent balance of payments need without requiring them to put a full-fledged programme in place.
According to a report in The Express Tribune, the loan will push Pakistan's foreign currency reserves apparently to a one-month high above $12 billion. The IMF executive board approved the low-cost emergency loan last week to help Pakistan meet the urgent balance of the international payment needs in the face of the COVID-19 pandemic, according to a recent IMF statement.
With the latest recovery of Rs 0.76 in the inter-bank market on Wednesday, the rupee has cumulatively regained Rs 7.53, or 4.5 per cent, in the past two weeks to a one-month high at Rs 160.36 to the US dollar, the SBP said in a statement.
Earlier, the foreign currency reserves had dropped to a four-month low at $10.97 billion on April 10, 2020, according to the central bank's weekly update on Thursday last week.
The reserves had partly depleted due to capital pullout worth around $2.69 billion by short-term foreign investors from Pakistan's debt market over the past five to six weeks. Many of them sold premature treasury bills and long-term Pakistan Investment Bonds in panic following the fast spread of the coronavirus across the world.

Foreign debt repayments also consumed the foreign currency reserves in the past four months.

Pak moves a step closer to IMF bailout package after Imran overhauls team

International News
Pakistan moved a step closer to concluding a financial aid package with the International Monetary Fund after Prime Minister Imran Khan overhauled his economic team and chose a former official from the Washington-based lender as governor of the nation’s central bank.
Reza Baqir -- who served in senior positions at the IMF in past 18 years, including as the fund’s resident representative in Egypt -- was named head of the State Bank of Pakistan at the weekend. His predecessor Tariq Bajwa was fired along with the chief of the tax-collecting agency, Mohammad Jehanzeb Khan. Earlier in April, Finance Minister Asad Umar stepped down and was replaced by Abdul Hafeez Shaikh, a former World Bank official, as the prime minister’s adviser.
Shaikh and Baqir’s experience mean they “would be in a better position to translate the IMF’s message and communicate between the government and the fund comparatively easily,” said Muhammad Arif Habib, chief executive of Arif Habib Corporation.
Pakistan needs the financial aid to ease a balance-of-payment crisis triggered by high fiscal and current-account deficits and dwindling foreign exchange reserves. The South Asian nation has already taken 12 IMF support packages since the 1980s.
Loan Talks

 Shaikh is now negotiating what he called a reasonable loan package with the IMF’s team, led by mission chief Ernesto Ramirez Rigo, who is currently in Islamabad for talks with officials. Negotiations with the IMF have stalled twice in the past over various disagreements, such as the exchange rate policy. The IMF wants Pakistan to raise its tax-to-GDP ratio significantly and contain losses at public enterprises in order to plug financial gaps.Pakistan’s credit score was downgraded by S&P Global Ratings in February, which cited a weak economic outlook and the delay in securing an IMF bailout.