IMF Agrees to $7 Billion Loan Program for Pakistan

July 13, 2024

The International Monetary Fund (IMF) and Pakistan reached a deal on July 12, 2024, for a $7 billion loan program that will last for 37 months. The main goal of this Extended Fund Facility program is to help Pakistan, a country that has had a lot of economic problems, become more stable and grow in a way that benefits everyone.

Approval and Conditions

The IMF has said that the new program can’t start until its Executive Board agrees to it. Pakistan also needs to get “timely confirmation of necessary financing assurances” from important developmental and bilateral partners like China, the United Arab Emirates, and Saudi Arabia. These assurances could include loan rollovers or payments.

Background of Negotiations

This deal was discussed in May after a short-term $3 billion scheme was successfully finished. This earlier scheme was very important for stabilizing Pakistan’s economy and keeping the country from defaulting on its debt.

Economic Reforms and Aims

Nathan Porter, head of the IMF mission in Pakistan, said that the goal of the new program is to build on the “hard-won macroeconomic stability” of the past year. To encourage growth driven by the private sector, efforts will be focused on improving the economy’s health, lowering inflation, building up external buffers, and getting rid of economic flaws.

Fiscal Targets and Economic Challenges

To get ready for the IMF program, Pakistan has set a high tax income goal of 13 trillion rupees ($47 billion) for the fiscal year that starts on July 1. This is almost 40% more than the previous year’s goal. Pakistan’s economy has been unstable in the past, which is why it has needed 22 IMF bailouts since 1958. Pakistan is still the IMF’s fifth-biggest customer, with $6.28 billion in loans still due as of mid-July 2023. This project shows that the Pakistani government, led by Ali Pervaiz Malik, Minister of State for Finance, Revenue, and Power, is still working to keep the economy growing and the finances stable. Malik has stressed how important it is to finalize the new loan agreement before the IMF Executive Board’s annual August break. However, the exact time that the board will consider the deal is still unknown.

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