IMF Approves $7 Billion Loan for Pakistan: A Step Towards Economic Stability

Pakistan has secured a $7 billion loan from the International Monetary Fund (IMF) under the Extended Fund Facility, with the first tranche of $1 billion already released. This 37-month loan program aims to support Pakistan’s efforts to achieve economic stability and promote stronger, more inclusive growth.

Economic Growth and Challenges

Pakistan’s economic growth rate has reached 2.4%, driven by increased agricultural sector activities. However, the country still faces significant challenges, including:

• Difficult business environment
• Weak governance
• Limited tax base

Progress Under the Stand-By Arrangement

Over the past year, Pakistan has made notable progress under the Stand-By Arrangement, implementing policies to restore economic stability. Key achievements include:

• Reduced inflation to a single digit
• Controlled current account deficit
• Rebuilt foreign exchange reserves

Way Forward

The IMF commends Pakistan’s strong budget presentation in June 2024 and notes the State Bank’s policy rate reduction by 450 basis points since June. However, the fund emphasizes the need for:

• Increased spending on health and education
• Improved infrastructure investment
• Climate change resilience

Reform Adjustments Crucial

The IMF warns that without appropriate reform adjustments, Pakistan risks falling behind other countries ¹. Continuous financial support from development partners is critical to the program’s success.

As Pakistan navigates its economic challenges, this IMF loan provides a vital lifeline. With committed reforms and support, Pakistan can overcome its obstacles and achieve sustainable growth.

Also Read: Pakistan’s Economy on the Right Track, Says IMF Chief