The US will lend a helping hand to crisis-hit Pakistan for economic recovery

US President Joe Biden has proposed doubling the economic support fund for crisis-hit Pakistan to $82 million for fiscal year 2024 to help the country recover from devastating floods, diversify energy supplies and support activities to build emergency response capacity.

The US State Department said aid to Pakistan will expand private sector economic growth, strengthen democratic institutions and promote gender equality and women’s empowerment.

The budget proposes to provide Pakistan USD 82 million for the fiscal year 2024, starting in October, under the Economic Support Fund category. The support was USD 39 million in 2022.

Pakistan is also proposed to receive US$17 million under the international narcotics and law enforcement category and another US$3.5 million under the international military education and training category, according to PTI reports.

The administration has also proposed US$32 million for Pakistan under the global health programs category of the United States Agency for International Development (USAID).

Pakistan and the IMF Agreement

Currently, the debt-ridden Pakistani government is in a race against time to implement measures to reach an agreement with the International Monetary Fund (IMF), as the country reportedly has barely enough reserves for over a month of essential imports.

The agreement with the IMF on the completion of the ninth review of an extended fund facility program of 7 billion USD — which has been delayed since the end of last year due to a political framework — would not only lead to a payout of 1.2 billion but also release inflows from friendly countries.

The financial body even announced that it will temporarily increase funding limits for member countries to help them overcome current financial challenges, while remaining locked in an unfinished loan program required for the ongoing economic crisis in Pakistan.

The government has also increased tax rates, policy interest rates, reduced ministerial spending, etc. to meet all demands from the IMF to unlock the next tranche of $6.5 billion bailout.

The US encourages Pakistan to continue cooperation with the IMF

The United States on Thursday urged crisis-hit Pakistan to improve its business environment, which would make the South Asian country more attractive and competitive around the world. According to the State Department, Pakistan is a country of enormous potential and the United States has partnered with it.

State Department spokesman Ned Price said Pakistan has faced economic headwinds recently, while citizens face record inflation levels.

“This comes against the backdrop of the widespread flooding across parts of the country. And it has only brought into focus our need to continue to work together to help the people of Pakistan to help put themselves on a sustainable economic path and a sustainable path to the prosperity that we seek for the people of Pakistan,” he said.

He further said that the United States encourages Pakistan to continue cooperation with the IMF, especially on reforms that will improve Pakistan’s business environment. “We know it will ultimately make Pakistani companies more attractive and competitive around the world.”

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