IMF’s $1 Billion to Pakistan: Extended Fund Facility Explained
Why in the news
The IMF cleared $1 billion for Pakistan under its Extended Fund Facility to steady the economy; reforms cover tax collection, energy pricing, deficit and inflation.
About the EFF
- An IMF programme (IMF is a Bretton Woods institution) for long-run balance of payments difficulties from structural weaknesses.
- A repayable loan, not aid; tenure generally three years or more with longer repayment.
- Purpose: medium-term reforms such as tax overhaul, inflation control and lower fiscal deficit.
- Eligibility: persistent current account deficits, deep governance or public finance issues, commitment to IMF-monitored reforms.
Approval steps
- Request by the country.
- Staff-level agreement on measures and targets.
- Executive Board approval.
- Tranches released against reform milestones.
Exam angle
- EFF = loan with phased disbursement after policy review.