The International Monetary Fund Thursday pledged $450 million in emergency loans to Pakistan to help the country cope with a massive flood disaster.
The IMF is also in talks with Pakistan about handing over the next instalment in a loan programme that has been running since November 2008.
IMF Managing Director Dominique Strauss-Kahn, after meeting with Pakistani Finance Minister Abdul Hafeez Shaikh, said the talks were “progressing” and that $1.7 billion in loans could be made available later this year.
The emergency aid must still be approved by the IMF’s executive board but was likely to be handed out this month.
The World Bank, the IMF’s sister lender, agreed Wednesday to boost its own emergency aid funding for Pakistan to $1 billion.
More than one-fifth of Pakistan has been submerged in the floods and more than 1,700 people have been killed.
“The floods in Pakistan are first and foremost a human tragedy still affecting millions of people,” Strauss-Kahn said in a statement. “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.”