Pakistan: IMF to provide $1.1 billion amid catastrophic floods
The International Monetary Fund (IMF) has agreed to release $1.17 billion (€1.17 billion) in funds to the Pakistani government as the country faces rising death tolls and widespread destruction from the floods which the government has called a “climate disaster”.
The money was originally part of a government bailout loan from 2019, but final payments were suspended after Imran Khan’s previous administration failed to respond to IMF demands to cut energy subsidies.
“Alhamdulillah, the IMF Executive Board has approved the relaunch of our EFF program,” Pakistani Finance Minister Miftah Ismail said on Twitter.
The IMF also agreed to extend the program by an additional $1 billion, he later added.
It comes as the United Nations appeals on Tuesday for $160 million to fund emergency aid.
The country’s planning minister, Ahsan Iqbal, estimates the reconstruction could cost more than $10 billion.
IMF welcomes spending cuts
The current government of Prime Minister Shehbaz Sharif has drawn widespread criticism in recent months after imposing three fuel price hikes – totaling 50% in total – and raising the cost of electricity to end subsidies from its predecessor.
However, the policies brought public spending in line with existing IMF requirements for massive lending.
In a statement, the IMF did not specifically mention the floods, but rather welcomed the new spending cuts.
“Pakistan’s economy has been rocked by adverse external conditions, due to spillovers from the war in Ukraine, and internal challenges,” said IMF Deputy Managing Director Antoinette Sayeh.
“The steady implementation of corrective policies and reforms remains essential to regain macroeconomic stability, address imbalances and lay the foundations for inclusive and sustainable growth.”
Trade with India on the table
The unprecedented humanitarian and economic crisis has prompted the Pakistani government to consider resuming trade with India.
“We can consider importing vegetables from India,” Ismail told local news channel Geo News TV.
Indian Prime Minister Narendra Modi said he was saddened by the devastation caused by the floods.