By The International Monetary Fund (IMF) has approved a new $7 billion loan program for Pakistan, contingent on the implementation of “sound policies and reforms” aimed at strengthening macroeconomic stability, addressing structural challenges, and promoting inclusive, resilient growth.
The IMF emphasized that these reforms are crucial to the government’s strategy for stabilizing the economy and creating sustainable growth. Additionally, continued financial support from Pakistan’s development and bilateral partners is essential for the success of the program, the IMF noted.
In its statement, the IMF highlighted Pakistan’s progress under the 2023-24 Standby Arrangement (SBA), with growth rebounding to 2.4% in FY24, driven by agricultural activity. Inflation has significantly decreased, returning to single digits, due to tight fiscal and monetary policies. The current account deficit has been contained, allowing for reserve rebuilding and calmer foreign exchange market conditions.
This stability has enabled the State Bank of Pakistan to lower the policy rate by 450 basis points since June, backed by a fiscally responsible FY25 budget. The IMF credits these improvements to Pakistan’s consistent policy execution under the SBA.
The new Extended Fund Facility (EFF) program will focus on key priorities, including restoring policymaking credibility, ensuring macroeconomic sustainability, broadening the tax base, enhancing competition and productivity, reforming state-owned enterprises (SOEs), improving public services and energy sector viability, and building climate resilience.
