IMF to approve a 7.5-billion-dollar loan for Pak on Nov 22November 11th, 2008 - 3:40 pm ICT by ANI
Islamabad, Nov 11 (ANI): The International Monetary Fund (IMF)s executive boards meeting, which is scheduled to be held on Nov 22, is likely to approve a two-year 7.5 billion dollar bailout package under the stand-by arrangement (SBA).
The IMF will extend the loan under the newly created short-term liquidity facility (SLF), under which all the emerging economies with a strong record of implementing rigid macroeconomic policies, but caught up in the global financial crisis, are eligible for loans.
The Pakistan government is struggling for the said loan by selling the economic performance during the Musharraf regime owing to which the country has been lifted from a low-income to the medium-income country.
The loan will carry 6-6.5 per cent interest against the SDR (special drawing rights) of 1.3 billion dollars to help Pakistan restore financial and economic discipline, The News quoted a senior government official in the finance ministry as saying.
Pakistan is to pay 45-50 million dollars more to the IMF apart from repaying principal of 7.5 billion dollars under the stand-by arrangement if the loan is obtained at interest rate of 6-6.5 per cent, he added.
The official further said that the repayment timeframe would be decided by the IMF. However, the 7.5 billion dollar loan will be paid quarterly and not in one go, he said and added that the size of the first instalment may hover around 3-4 billion dollars and the remaining amount would be delivered on a quarterly basis.
Pakistans ailing economy, with fast dwindling net foreign reserves that have reduced to 3.4 billion dollars, burgeoning trade deficit of 7.5 billion dollars and 25 per cent inflation, is left with no option but to obtain the IMF loan.
The Friends of Pakistan group have already advised Islamabad to first move the International Monetary Fund to qualify for their formal financial commitments which they will make in a meeting to be held in Dubai on Nov 17. (ANI)
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