KARACHI – Pakistan has successfully secured a $7 billion bailout package from the International Monetary Fund (IMF) after meeting the lender’s stringent requirements in its annual budget.
The IMF announced a staff-level agreement with the Pakistani government, commending the country for adhering to the terms set out in the Stand-by Arrangement (SBA) signed by the Shehbaz Sharif-led PDM government in 2023. This new agreement marks a significant milestone in Pakistan’s efforts to stabilize its economy and ensure sustainable growth.
Over the next three years, Pakistan will receive the bailout funds, contingent on its continued commitment to implementing comprehensive economic reforms. These reforms include expanding the tax base, privatizing state-owned enterprises, and securing additional loans from allies such as China, Saudi Arabia, and the UAE.
The IMF’s statement highlighted that the new 37-month Extended Fund Facility (EFF) arrangement builds on the economic stability achieved under the 2023 SBA. The EFF aims to enhance macroeconomic stability and foster conditions for stronger, more inclusive, and resilient growth in Pakistan.
Key components of the program include:
- Strengthening Fiscal and Monetary Policies: Improving fiscal discipline and ensuring effective monetary policies to stabilize the economy.
- Broadening the Tax Base: Implementing measures to increase tax revenues and reduce reliance on external funding.
- Improving Management of State-Owned Enterprises (SOEs): Enhancing the efficiency and profitability of SOEs through privatization and better governance.
- Fostering Competition: Creating a level playing field for investment to boost economic activity and innovation.
- Enhancing Human Capital: Investing in education and skills development to improve workforce productivity.
- Expanding Social Protection: Increasing support and coverage in the Benazir Income Support Program (BISP) to protect the most vulnerable segments of society.
The IMF emphasized the importance of robust financial support from Pakistan’s development and bilateral partners for the program’s success. Continued collaboration and financial assistance from international allies will be crucial in achieving the program’s goals and ensuring long-term economic stability.
In summary, Pakistan’s agreement with the IMF marks a critical step in the country’s journey towards economic recovery and growth. By implementing key reforms and securing international support, Pakistan aims to build a stronger, more resilient economy that benefits all its citizens.
