IMF approves $847M loan to Islamabad

The International Monetary Fund has approved an $847.1 million loan to Pakistan as part of an emergency loan to help bolster the impoverished nation’s economic stabilization program.The International Monetary Fund on Monday said it would lend roughly 847 million dollars to Pakistan as part of an emergency loan to help support the country's economic stabilization program.The IMF said its board approved the payment after a first review of Pakistan's economic performance under a program supported by a 7.6-billion-dollar line of credit agreed late last year.The 23-month Stand-By Arrangement (SBA) announced on November 24 was approved under the IMF's fast-track Emergency Financing Mechanism procedures."Pakistan's economy is gradually recovering from the macroeconomic and external imbalances of 2007-2008," Murilo Portugal, IMF deputy managing director, said in a statement."Policy steps taken by the authorities under the SBA-supported stabilization program, which aims at restoring financial stability while protecting the poor, have been instrumental in this regard," he said.The IMF said the sharply deteriorating global economy had forced it to revise downward Pakistan's near-term growth outlook.Adnan Mazarei, IMF's mission chief for Pakistan, said in a conference call that for the 2008-2009 fiscal year that begins in June, the growth forecast was slashed to 2.5 percent from a prior estimate of 3.5 percent.The growth forecast for 2009-2010 was lowered to 4.0 percent from 5.0 percent."But the risks are considerable," he warned, and growth "likely may be lower." 

Pakistan immediately received 3.1 billion dollars in the first tranche of the standby loan, with subsequent payments dependent on Islamabad fulfilling targets set by the IMF.