IMF Approves $7 Bln Loan for Pakistan

The International Monetary Fund (IMF) has approved a $7 billion loan for Pakistan, which has been facing severe financial difficulties.

The agreement comes after more than two months of negotiations between the IMF and Pakistan’s government. The loan will be disbursed over 37 months in installments, with an initial release of around $1 billion.

Pakistani Prime Minister Shehbaz Sharif praised the agreement, thanking IMF Managing Director Kristalina Georgieva and her team for their approval.

The loan is aimed at stabilizing Pakistan's struggling economy, which has been grappling with economic challenges, high inflation, and the threat of default on its sovereign debt.

In a statement issued Thursday, the IMF commended Pakistan for taking significant steps to restore economic stability.

Growth has rebounded, inflation has dropped to single digits, and the foreign exchange market has stabilized, allowing the country to rebuild its reserves.

However, the IMF also cautioned that Pakistan continues to face substantial structural challenges, including a difficult business environment, weak governance, and an overextended role of the state, which has hindered private investment.

Despite progress, the IMF stressed that Pakistan’s narrow tax base, insufficient spending on health and education, and inadequate infrastructure investment continue to hold back the country’s potential.

These vulnerabilities, combined with the impacts of climate change, remain significant obstacles to long-term recovery.

The loan approval follows a staff-level agreement reached between Pakistan and the IMF earlier this year.

The prime minister acknowledged the crucial role played by friendly nations, including China and Saudi Arabia, in facilitating the deal. Without their support, Sharif noted, Pakistan would not have been able to meet the IMF’s stringent conditions.

In compliance with IMF requirements, Pakistan has pledged to increase its tax revenues, despite widespread protests from retailers and opposition parties over new tax measures and rising electricity prices.