ISLAMABAD -- The International Monetary Fund (IMF) has approved the revival of a massive loan program for Pakistan as the country struggles to deal with a longstanding economic crisis made only worse by devastating monsoon flooding in recent weeks.
“The authorities have taken important measures to address Pakistan's worsened fiscal and external positions resulting from accommodative policies in Fiscal Year 2022 and spillovers from the war in Ukraine, and which have placed significant pressure on the rupee and foreign reserves,” the lender said in a statement on August 29.
The IMF said Pakistan “is at a challenging economic juncture.”
“The program seeks to address domestic and external imbalances, and ensure fiscal discipline and debt sustainability while protecting social spending, safeguarding monetary and financial stability, and maintaining a market-determined exchange rate and rebuilding external buffers.”
Pakistani Finance Minister Miftah Ismail said on Twitter that “the IMF Board has approved the revival of our [Extended Fund Facility] program. We should now be getting the 7th & 8th tranche of $1.17 billion.”
The tranches are part of an original $6 billion bailout package signed by former Prime Minister Imran Khan in July 2019.
But recent tranches have been delayed after the Khan government reneged on subsidy agreements and failed to significantly improve tax collection.
Khan, who came to power in 2018, was ousted in a no-confidence vote in April as the opposition accused him of economic mismanagement amid soaring inflation and economic woes.
On August 22, police filed terrorism charges against the former prime minister, a move that is likely to further escalate political tensions in the country.
The terrorism charges followed a speech made by Khan in Islamabad during which he vowed to sue police officers and a judge and alleged that a close aide had been tortured after his arrest.
Pakistan has so far received $3 billion from the IMF program. The facility was scheduled to end later this year, but the IMF granted an extension until June 2023 and approved a $1 billion increase in the total loan program.
The news comes as Pakistan struggles with massive monsoon flooding that has affected some 33 million people and killed more than 1,000.
Planning Minister Ahsan Iqbal told Reuters that economic losses from the flooding are likely to be more than $10 billion.