- Prime Minister Imran Khan recently appealed to the IMF and the UN to waive loans for poor countries.
- Except for every day and vegetable shops, every business in Pakistan has been closed.
- Careful estimates could put the employment of at least three to five million people at stake.
The Executive Board of the International Monetary Fund (IMF) has approved a $1.386 billion loan to Pakistan to tackle the COVID-19 outbreak. This loan was granted under the IMF’s Rapid Financing Instrument, and is equivalent to SDR 1,015.5 million. This is about half of Pakistan’s quota.
SDR’s, or Special Drawing Rights, are a special IMF currency, valued at five of the world’s largest currencies: the US dollar, British pound, the euro, Chinese renminbi, and Japanese yen. Speaking on the occasion, Deputy Managing Director of the IMF Executive Board, Geoffrey Okamoto, said:
“The outbreak of Covid-19 is having a significant impact on the Pakistani economy. The domestic containment measures, coupled with the global downturn, are severely affecting growth and straining external financing. This has created an urgent balance of payments need.
“In this context of heightened uncertainty, IMF emergency financing under the Rapid Financing Instrument provides strong support to the authorities’ emergency policy response, preserving fiscal space for essential health spending, shoring up confidence, and catalyzing additional donor support.”
Prime Minister Imran Khan recently appealed to the IMF and the UN to waive loans for poor countries, given the coronavirus’ weakening economic impact. At a press conference with the Foreign Ministry yesterday, Shah Mehmood Qureshi said that the IMF had approved the appeal, which would result in the loan being used for economic loss caused by the Coronavirus. ۔
Pakistan’s Economic Status
The situation caused by the Coronavirus has hampered the fulfillment of export orders due to the closure of factories, and has also halted foreign investment in the country. Except for every day and vegetable shops, every business has been closed.
More than 60% of the Large Scale Manufacturing Companies registered on the Pakistan Stock Exchange are currently closed, and the remaining 40% is partially operational. Fully-closed companies deal with the fields of auto, textile, engineering, cement, chemicals, etc. Due to these circumstances, government agencies are also raising concerns about the unemployment of millions.
Pakistan Institute of Development Economics, a subsidiary of the Ministry of Planning in Pakistan, has expressed concern over the unemployment of more than one million people while evaluating the negative impact on economic activity caused by the Coronavirus.
Talking about the fears of millions of people being unemployed from the economic crisis caused by the Coronavirus, Dr. Hafeez Pasha, the former finance minister, and economist of Pakistan, has said that the current situation is causing a dire economic scenario in the country.
According to their analysis, if the Coronavirus outbreak worsens, and the government remains committed to the current strategy, careful estimates could put the employment of at least three to five million people at stake. If the lockdown is extended for three months, it could endanger jobs of up to 10 million people.
According to Dr. Pasha, the economic crisis created by the Coronavirus can adversely affect three sectors in the country, with high unemployment rates. These include large and medium enterprises, wholesale and retail businesses, and the transport sector.