As corona crisis looms, IMF postpones approval of review for $450m tranche

• Pakistan was to receive the third tranche under the existing arrangement of $6 billion Extended Fund Facility (EFF).
• Just days ago, Pakistan said that it is seeking another $1.4 billion loan from the IMF to help it deal with the economic slowdown from the coronavirus.

With priorities now shifted towards providing economic assistance amid the Coronavirus uncertainty, the International Monetary Fund (IMF) has put-off the approval of the second review of the third tranche of $450 million for Pakistan.

As per reports, Pakistan was to receive the third tranche under the existing arrangement of $6 billion Extended Fund Facility (EFF). However, IMF priority has now shifted to the approval of a rapid financing facility of $1.4 billion for Pakistan.

Just days ago, Pakistan said that it is seeking another $1.4 billion loan from the IMF to help it deal with the economic slowdown from the coronavirus.

“This 1.4 billion we are requesting will be a low cost, fast disbursing loan," said, Finance Adviser Abdul Hafeez Shaikh. He said Pakistan would like the IMF to consider the loan separately to funds it had already set aside for losses to economies across the world due to the pandemic.

“We would like to secure funds for us before those losses are evaluated," he said. The IMF agreed to a three-year rescue package last year — its 13th bailout program for Pakistan since the late 1980s — as the South Asian country of 208 million people wrestles with a balance-of-payments crisis.

Back in February, the IMF and Pakistan have reached a staff-level agreement on policies and reforms needed to complete the second review of the reform program supported under the Extended Fund Facility (EFF). In a statement on the second review of the Extended Fund Facility (EFF), Ernesto Rigo of the IMF said that the agreement was subject to approval by the IMF management and consideration by the Executive Board, which is expected in early April.

Completion of the review would enable disbursement of SDR 328 million (around US$450 million), Rigo added.