Pakistan Conflict Monitor

IMF Okays $1.13 Billion in Aid for Pakistan

IMF Releases $1.13bn, Waives Two Conditions, DAWN, 16 May 2010

EXCERPT: "The International Monetary Fund (IMF) released $1.13 billion of loan to Pakistan on Saturday to help overcome its economic vulnerabilities and create room for urgent security outlays. The fund also accepted the government’s request for waiver of certain conditions in the current arrangement. In return, the government pledged to levy the value added tax (VAT) from July 1, as scheduled. It also had to accept some remedial actions proposed by the IMF. The IMF expressed the hope that the loan package would help the country overcome its economic vulnerabilities caused by a volatile security situation and persistent inflation. At a meeting held here, the IMF executive board approved waivers to give room for 'urgent security outlays and avoid undue cuts in other priority spending'. 'Pakistan's vulnerabilities remain high due to persistent inflation, security-related spending pressures, energy-sector problems and shortfalls in revenue collection and external financing,' IMF’s Deputy Managing Director Murilo Portugal said. But 'against a background of adverse security developments and a rapidly changing political environment, economic conditions have improved,' he said."

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Related articles:
Pakistan gets latest IMF tranche, Asia Times, 18 May 2010
Foreign direct investment in Pakistan falls 44.7% in 10 months, BusinessWeek, 17 May 2010

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IMF defers payments as fiscal deficit increases, 29 March 2010
Govt risks IMF aid money, 10 March 2010
World Bank commits $1.3 billion, says Pakistan on right track, 8 February 2010
IMF approves $1.2 billion in aid, 23 December 2009

IMF Defers Payments as Fiscal Deficit Increases

IMF Holds Back Cash to Pakistan, Asia Times Online, 30 March 2010

EXCERPT: "The International Monetary Fund (IMF) has deferred for an indefinite period disbursement of the fifth, US$1.2 billion, installment of funds to be paid to Pakistan under their $11.3 billion standby agreement. This came after the government failed to meet the condition of tabling draft value-added tax (VAT) legislation in the four provincial assemblies. [...] The IMF is digging its heels in on the issue after overlooking the country's failure to meet its budget deficit targets during the previous two reviews. The fund went along with the government's recommendation to allow the fiscal deficit target to be increased to 5.1% of gross domestic product (GDP) from the earlier target of 4.9%. IMF approval is crucial because other donor agencies, including the Asian Development Bank and the World Bank, take their lead from the fund."

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Related articles:
IMF to approve Pakistan tranche in April: Official, Hindustan Times, 29 March 2010
Pakistan to seek US help in tariff hike, VAT exemptions, The News International, 20 March 2010
Economic aid for Pakistan a victim of corruption worries, Los Angeles Times, 28 March 2010
IMF conditions may result in 3m job cuts: Economists, DAWN, 29 November 2008
Pakistan: A forced marriage to the IMF?, BBC News, 27 October 2008

Related posts:
Govt risks IMF aid money, 10 March 2010
World Bank commits $1.3 billion, says Pakistan on right track, 8 February 2010
IMF approves $1.2 billion in aid, 23 December 2009

Govt Risks IMF Aid Money

Pakistan Risks IMF's $1.2bn, Asia Times Online, 9 March 2010

EXCERPT: "Islamabad's tardiness in naming a finance minister to succeed Shaukat Tarin, who resigned on February 23 to pursue his own business interests, may delay the release of US$1.2 billion from the International Monetary Fund (IMF), part of a bailout package agree in November 2008. President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani have failed to agree on the appointment of Tarin's replacement despite a warning from the finance ministry that the absence of a minister with the right credentials could delay the release of the IMF funds, according to Business Recorder. [...]  Islamabad had to turn to the IMF for a $7.6 billion emergency loan package in November 2008 to meet its international obligations amid a widening current account deficit, which reached $15.6 billion that year. The IMF increased its loan to $11.2 billion in 2009. The government's economic situation has since deteriorated. External debts and liabilities are now $55.68 billion, or one-third of GDP, up from $46.16 billion, or 27.6% of GDP, in June 2008, according to the central bank. [...] The government's cash woes are being exacerbated by delays in reimbursements from the Coalition Support Fund (CSF) for expenditures incurred in the country's fight against terrorism. Islamabad has received only $897 million of its $1.4 billion claim to the CSF for 2008 spending. [...] The CSF appears to have become another lever for the Americans to press Pakistan in a relationship fraught with mutual suspicion, said a recent Dawn editorial. [...] Higher spending on security is failing to improve the country's attraction to overseas investors."

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Related articles:
Development: Going beyond band-aid solutions [op-ed], Daily Times, 9 March 2010
Pakistan on path of economic recovery: IMF, Daily Times, 18 February 2010

Related posts:
Coalition support fund rejects Pakistan's claims for $400 million, 3 March 2010
IMF approves $1.2 billion in aid, 23 December 2009

IMF Approves $1.2 Billion in Aid

IMF Approves $1.2 Billion in Aid, Reuters, 23 December 2009

EXCERPT: "The International Monetary Fund has approved a $1.2 billion aid payment to Pakistan after concluding a review of the country's economic performance, the fund said in a statement on Wednesday. The IMF bailed out Pakistan in 2008 to avert a balance of payments crisis that, allied to budget and political concerns, had undermined investors' faith in a country central to U.S. efforts to confront al Qaeda and settle a volatile region. The economic performance review came as Pakistan officials sought to keep funds flowing from its $11.3 billion aid deal, and the IMF said that with the newest disbursement the total paid out had reached about $6.54 billion. . . . Along with the IMF help, Pakistan was promised $5.7 billion in aid over two years at a donors conference in April, but only a fraction of the funds has arrived as donors demand Pakistan follow through on reforms."

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Related articles:
Zardari says Pakistan needs aid to fight "monster" of extremism, Bloomberg, 23 December 2009
Pakistan set to get $1.2 billion from IMF, DAWN, 16 December 2009
Factbox: Five political risks to watch in Pakistan, Reuters, 15 December 2009
Pakistani officials in Dubai seeking emergency IMF aid, The Telegraph, 21 October 2008
Rebuffed by China, Pakistan may seek IMF aid, The New York Times, 18 October 2008

Related posts:
European Union aid to Pakistan: Steadily on the rise, 15 December 2009
EU plans to strengthen action in Afghanistan and Pakistan, 27 October 2009
Obama signs US aid to Pakistan, 15 October 2009