The IMF today announced to provide $450 million in immediate emergency financing to Pakistan to help it cope with the massive and devastating floods that have hit the country.
"The floods in Pakistan are first and foremost a human tragedy still affecting millions of people. But this natural disaster will also have an important effect on the country's economy as it has caused serious damage to infrastructure, severely impacted economic outlook and resulted in a worsening of the fiscal situation,"" IMF managing director Dominique Strauss-Kahn said.
"In response to this, I will be asking the IMF Board to approve $450 million of emergency assistance to be made available this month," he said after meeting Pakistan's finance minister Abdul Hafeez Shaikh, as the IMF and Pakistani authorities discuss the country's economy in light of the floods.
"Our dialogue with Pakistan on the current Stand-By Arrangement is progressing and the authorities have expressed their intention to implement measures for the completion of the fifth review of the program later this year," he said.
"We will stay in close contact as these efforts proceed. Completion of the fifth review will allow the Fund to disburse an additional $1.7 billion, bringing total IMF disbursements (including emergency assistance) to $2.2 billion in the second half of 2010," Strauss-Kahn said.
Commenting on these discussions, Shaikh said, "Pakistan remains committed to the reform efforts that will put public finances on a sustainable basis and lay the foundations for growth."
The emergency financing would be provided under the Fund's policy for Emergency Natural Disaster Assistance (ENDA). The ENDA amount will be allocated to Pakistan's budget to support the authorities' emergency response.
The ENDA funding, which is subject to approval by the IMF Executive Board, will be disbursed this month.
The emergency assistance comes on top of the $7.3 billion provided under the current Stand-By Arrangement, in place since November 2008, the IMF said.
