The International Monetary Fund last week approved a $ 500 million disbursement to Pakistan for budget support after the IMF Executive Board completed delayed reviews of Pakistan’s $6 billion loan program. The South Asian nation is now ready to offer a foreign currency bond and has hired commercial banks, according to a report by Bloomberg.
The government has mandated Deutsche Bank, JPMorgan Chase, Credit Suisse Group, Standard Chartered and Emirates NBD Bank PJSC.
Borrowing costs in debt markets globally have jumped in recent weeks after a spike in rates fueled by rebounding economic activity around the world. Pakistan is also currently contending with an increase in coronavirus cases that has seen new restrictions imposed in most major cities.
The IMF said in a statement that the latest payment brought total disbursements under the Extended Fund Facility to $2 billion since the program was first approved in July 2019.
“The Pakistani authorities have continued to make satisfactory progress under the Fund-supported program, which has been an important policy anchor during an unprecedented period,” IMF Deputy Managing Director Antoinette Sayeh said in a statement.
“While the Covid-19 pandemic continues to pose challenges, the authorities’ policies have been critical in supporting the economy and saving lives and livelihoods,” she said.
The disbursement was made after Pakistan cleared up an issue with data on government guarantees dating back to the 2016 fiscal year that had been reported inaccurately and put the government in non-compliance with the program.
The IMF said Pakistani authorities had taken strong corrective actions to address institutional shortcomings, including a lack of interagency coordination, to correct the issue.
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