Pakistan can repay China's loans while remaining in the IMF program

• Pakistan's expenditure may increase by up to Rs700 billion, whereas, the country’s tax receipts are expected to decrease by Rs900 billion, says Sanchez.
• Sanchez informed that Pakistan has not requested the IMF to defer its loan payments.

Pakistan can repay its loans from China while remaining in the International Monetary Fund (IMF) program, informed Resident Representative of the IMF to Pakistan, Teresa Daban Sanchez on Monday.

Addressing a seminar, Sanchez said that the world is facing a number of challenges due to the coronavirus pandemic; the IMF has provided $50 billion globally to deal with the COVID-19 impact.

She said that Pakistan has taken timely measures against coronavirus. Prior to the coronavirus crisis, economic reforms and measures were being taken.  Sanchez said that after the IMF program, the country's economy was steadily improving whereas Pakistan’s tax receipts were also increasing in

However, Pakistan's economic growth rate is expected to decline due to the coronavirus impact, she informed. The inflation rate is expected to remain at 11.3 percent this fiscal year. Pakistan's expenditure may increase by up to Rs700 billion, whereas, the country’s tax receipts are projected to decline by Rs900 billion.

The IMF Resident Representative further said that the IMF has no involvement over the decision on petroleum prices in Pakistan. If the government does not reduce the petroleum levy then it is its prerogative.

Sanchez informed that Pakistan has not requested the IMF to defer its loan payments.

Talking about Pakistan's power sector Sanchez said that the authorities need to introduce reforms in this vital sector, improved management, reduced line loses and improved its collection.

It is pertinent to inform that the Executive Board of the IMF approved a purchase of Pakistan under the Rapid Financing Instrument (RFI) equivalent to SDR US$ 1.386 billion to meet the urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic.

“The outbreak of COVID-19 is having a significant impact on the Pakistani economy. The domestic containment measures, coupled with the global downturn, are severely affecting growth and straining external financing. This has created an urgent balance of payments need,” said Geoffrey Okamoto, First Deputy Managing Director, and Acting Chair.

“In this context of heightened uncertainty, IMF emergency financing under the Rapid Financing Instrument provides strong support to the authorities’ emergency policy response, preserving fiscal space for essential health spending, shoring up confidence, and catalyzing additional donor support,” he added.