National Bailout Watch: Pakistan Receives IMF Loan
International Monetary Fund and Pakistan have announced an initial agreement on a $7.6 billion loan to bolster the beleaguered country:
ISLAMABAD, Pakistan (CNN) — Pakistan’s government has agreed to a $7.6 billion aid deal with the International Monetary Fund (IMF), Pakistan’s top finance official said.
The IMF endorsed Pakistan’s homegrown program after a review and agreed to the aid package to be paid out overtwo years to help Pakistan meet short term financial needs, including balance of payments, said Shaukat Tareen, the finance advisor to Pakistan’s prime minister.
“The only thing which we debated was the interest rates,” Tareen said. Pakistan agreed to a two percent interest rate, he said.
The agreement is still subject to approval by the IMF’s governing board.
Here’s some of the IMF’s comments:
The IMF said it has reached an initial agreement with Pakistan on the key elements of an economic program supported by an $7.6 billion loan to meet the country’s serious balance of payments difficulties.
The 23-month Stand-By Arrangement is subject to the approval by the IMF Executive Board, which is expected to meet to discuss the program shortly, under the Fund’s emergency financing mechanism. The IMF said the proposed loan amounted to some 500 percent of the country’s quota in the Fund.
To a great degree the problems that have prompted Pakistan to seek this loan were caused by the skyrocketing price of oil a few months back. With oil trading at a two year low that’s less likely to be as great a problem in the near future.
I hope that any agreement that the IMF has reached with Pakistan includes the country’s curtailing its subsidies on oil. Pakistan has a structural problem and subsidizing the consumption of something that’s imported is a built-in aggravation.
Next on the list of countries looking for bailouts:
I understand the Icelanders are upset because Pakistan got their loan approved so quickly despite Iceland’s application having been filed first.