IMF Agrees to $7 Billion Loan for Pakistan’s Economic Reforms

The IMF and Pakistan have agreed on a 37-month Extended Fund Facility.

The International Monetary Fund has agreed to loan Pakistan $7 billion to support its struggling economy, with Islamabad promising that this would be the last time it sought assistance from the Washington-based lender. It marks the 24th time Pakistan has received funds from the IMF since 1958. In exchange for the loan, Pakistan has committed to implementing reforms, including expanding its tax base. Despite receiving last-minute loans and an IMF rescue package, Pakistan’s economy still faces challenges, such as high inflation and substantial public debts.

Responding to Pakistan’s request, a team from the International Monetary Fund (IMF), led by Nathan Porter, IMF’s Mission Chief to Pakistan, engaged in discussions in Islamabad from May 13-23, 2024, as well as virtually after that, to explore IMF support for Pakistan’s medium-term policy and reform plans. Following the discussions, Mr. Porter issued the following statement:

“The Pakistani authorities and the IMF team have achieved a staff-level agreement on a comprehensive program endorsed by both federal and provincial governments, which could be supported by a 37-month Extended Fund Facility (EFF) totaling SDR 5,320 million (about US$7 billion at current exchange rates). The agreement is subject to approval by the IMF’s Executive Board and timely confirmation of necessary financing assurances from Pakistan’s development and bilateral partners.

The program aims to build on the past year’s hard-earned macroeconomic stability by strengthening public finances, reducing inflation, rebuilding external buffers, and eliminating economic distortions to stimulate private-sector-led growth.”

Source: IMF