Pakistan

IMF approves 7.6 billion dollar loan

Article published on the 2008-11-25 Latest update 2008-11-25 10:24 TU

A trader in Kirachi.
(Photo: Reuters)

The International Monetary Fund (IMF) granted final approval for a 7.6 billion dollar (5.9 billion euro) emergency loan package to be given to Pakistan, as it struggles to pay its debts in the worsening international economic situation.

The IMF said that the first installment of 3.1 billion dollars (2.4 billion euros) will be made available immediately.

Pakistan was hesitant to approach the IMF for help, but had little choice after close allies such as the United States, China and Saudi Arabia all refused requests for additional bilateral aid.

The immediate pressure is now off Pakistan, which feared that it wouldn’t be able to pay off its short-term loans due early next year, but lingering doubts remain about the country’s solvency.

The IMF said that in return for the loan, Pakistan will be required to get rid of energy subsidies, raise taxes, and cut its government budget. The World Bank would establish a “comprehensive” social security net to help the poor with the effects of these austerity measures.