Monetary Fund Approves $7.6 Billion Loan to Pakistan

The International Monetary Fund approved a $7.6 billion loan for Pakistan on Tuesday to prevent it from defaulting on its debt and to help stabilize its economy, The New York Times reported. The loan, under discussion for more than a month, at first met strong resistance from the Pakistani government, which sought money on more generous terms from other countries. But Pakistan’s major allies--the United States, China and Saudi Arabia--insisted that it accept the loan and the IMF conditions before they offered assistance. Those donors, worried about the crumbling economy and the escalating instability from Taliban insurgents, have declined pleas by Pakistan’s senior politicians, including President Asif Ali Zardari, for quick infusions of cash with no strings attached. The acceptance of the IMF loan will raise the confidence of foreign and domestic investors, and the major donors are now expected to be reasonably generous, Pakistani economists said. Pakistan would get immediate access to about $3.1 billion, and the rest would be released based on quarterly reviews, the fund said in a statement. The IMF conditions include a demand that the government increase tax rates, among the world’s lowest. The fund wants an increase in agriculture taxes--a move that members of Parliament, many of them landowners, have opposed for decades. Read more.