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IMF approves $131-million loan for Pakistan

The International Monetary Fund on Wednesday approved the release of a $131 million disbursement under a $596 million loan for Pakistan, granted late last year.

The disbursement for cash-strapped Pakistan follows the second review of its economic progress since the loan was approved in November.

IMF said in a statement it also approved waivers for performance criteria on tax revenue collection and the elimination of interest subsidy element of the export finance scheme under the facility.

IMF deputy managing director and acting chairman Eduardo Aninat said that Pakistan had made encouraging achievements under the program supported by the loan agreement, but still faces major challenges.

"The key challenge will be to implement the recently announced 2001-02 budget," Aninat said in a statement.

"Another key challenge will be to achieve the targets for foreign exchange reserves, which will require good coordination of monetary and exchange rate policies and further progress toward a genuinely market-based exchange rate policy," he said.

"Other reform priorities are to further improve governance in the management of public resources and the ongoing restructuring of public enterprises and to strengthen the soundness of the financial system," Aninat said.

The review is good news for Pakistan, which critically needs to stay on track with the IMF. Pakistan needs the endorsement from the Washington-based lender not just for the IMF funds, but also to help it receive loans from the World Bank and Asian Development Bank for development projects.

The decision will bring total disbursements to Pakistan under the stand-by loan to $455.6 million.

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