Islamabad (TDI): In a diplomatic embarrassment for India, the International Monetary Fund (IMF) executive board on Friday approved two packages for Pakistan worth $2.4 billion, including a new $1.4 billion facility to mitigate climate challenges.
IMF greenlit the $1 billion worth second loan tranche of the Extended Fund Facility (EFF) and approved a new $1.4 billion Resilience and Sustainability Facility (RSF), according to Pakistani authorities.
The IMF board approved the tranches by rejecting New Delhi’s unwarranted objections to the financing package. India in total disregard to the global lender’s charter tried to politicize the balance of support facility.
The Fund would immediately disburse the $1 billion second loan tranche under the EFF while the $1.3 billion would be released over a period of the upcoming 28 months.
With the approval of the $1 billion second tranche because of Islamabad’s better fiscal performance, the total disbursements under the EFF would hit $2.1 billion.
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The package would once again increase the country’s gross official foreign exchange reserves to $11 billion. Better flow of foreign remittances has also helped sustain the reserves in double digits despite making some notable foreign debt repayments.
The deals were agreed after both sides made some adjustments in the 25th EFF, including lowering tax targets in absolute terms, setting a new deadline to trim the Pakistan Sovereign Wealth Fund and opening the economy to foreign companies.
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New Delhi undertook an unwise move to block the approval despite having only 2.7 percent voting rights, the second defeat in less than seventy-two hours after losing five fighter jets to Pakistan Air Force.
