The International Monetary Fund said its executive board has approved $1.386 billion (Dh5.09bn) in emergency financing to Pakistan to address the economic impact of the coronavirus shock.
The funds, to come from the IMF's Rapid Financing Instrument (RPI), will help Pakistan meet the urgent balance of payment needs stemming from the outbreak of the pandemic, the IMF said on Thursday.
Geoffrey Okamoto, the IMF's First Deputy Managing Director and Acting Chair, said Pakistan's "domestic containment measures, coupled with the global downturn, are severely affecting growth and straining external financing".
The IMF emergency financing will provide "strong support to the authorities' emergency policy response, preserving fiscal space for essential health spending, shoring up confidence, and catalysing additional donor support", Mr Okamoto said.
Of the more than 2.1 million confirmed Covid-19 cases worldwide, Pakistan has reported over 7,000 cases and 135 deaths as of Friday, according to Johns Hopkins University.
Like many countries around the world, Pakistan took measures to contain the spread of the virus, including border closures with neighbouring countries, international travel restrictions, school closures and lockdowns.
A relief package worth 1.2 trillion Pakistani rupees (Dh26.3bn) was announced by the authorities on March 24, according to the IMF, which tracks key policy responses. The State Bank of Pakistan (SBP) has responded to the crisis by cutting the policy rate twice by a cumulative 225 basis points to 11 per cent in the span of less than two weeks in March.
"In response to the crisis, the government of Pakistan has taken swift action to halt the community spread of the virus and introduced an economic stimulus package aimed at accommodating the spending needed to tackle the health emergency and supporting economic activity," Mr Okamoto said. "Crucially, the authorities are increasing public health spending and strengthening social safety net programmes to provide immediate relief to the most vulnerable."
The SBP has also introduced new refinancing facilities to support liquidity and credit conditions and safeguard financial stability. "In this context, the authorities' policies should be targeted and temporary," he said.
The IMF has already approved an immediate debt relief package for 25 of the world's poorest countries under the Catastrophe Containment and Relief Trust. It has also approved either a Rapid Financing Instrument or Rapid Credit Facility for nine more countries, including Albania, Gabon, Ghana, Kosovo, Kyrgyz Republic, the Republic of North Macedonia, Pakistan, Senegal and Tunisia.
