Published: July 31, 2009

ISLAMABAD: The International Monetary Fund is likely to approve an additional $4.1 billion loan to Pakistan, Shaukat Tarin, economic adviser to the country's prime minister, said Friday.

The IMF will also approve a $850 million third tranche of a 23-month standby arrangement of $7.6 billion on Aug. 7. The facility was sanctioned in November 2008 to salvage Pakistan from a balance of payment crisis, Tarin said.

IMF officials weren't immediately available for comment.

Pakistan in April received $848 million from the IMF as the second installment, and has so far received $3.9 billion under the standby facility.

"The government has received a positive response from the International Monetary Fund and we hope that the fund will approve a loan amounting to $3.1 billion in August, and around $1 billion in December after the revision of the country's quota," Tarin told reporters.

Pakistan, in June, had asked the International Monetary Fund for an additional $4.1 billion stand-by loan to finance the 2009-10 budget deficit.

The government expects the fiscal deficit to rise to 4.9% of gross domestic product - or PKR722.5 billion - in the fiscal year from July; above the 4.6% target set by the IMF.

With the additional loan, the program size will grow to $11.7 billion, said Tarin, who is tipped to be the finance minister after his election to the Senate.

The government is expected also to get around $4 billion from the Friends of Pakistan group by October, Tarin added.

"The U.S. and Japan have committed $1 billion each, while Saudi Arabia has pledged to provide $700 million and the United Arab Emirates has agreed to give $300 million. The remaining amount is also workable and isn't very difficult to get," he said.

News Categorization:

Indo-Pak