Pakistan has secured substantial financial backing from China, Saudi Arabia, and the United Arab Emirates as part of a recent arrangement with the International Monetary Fund (IMF). According to an IMF official, this support extends beyond the $12 billion in bilateral loans that Islamabad already owes these nations.
Financial Assurances Beyond Debt Rollover
Nathan Porter, the IMF Mission Chief for Pakistan, did not specify the additional financing amount but confirmed that it complements the existing debt rollover agreement. During a press briefing, he stated, “The UAE, China, and the Kingdom of Saudi Arabia all provided significant financing assurances as part of this programme.”
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This development comes on the heels of the IMF Executive Board’s approval of a new $7 billion, 37-month loan programme for Pakistan, announced on Wednesday. This programme aims to stabilize the nation’s economy through sound policies and reforms, with an immediate release of a $1 billion disbursement.
Economic Progress and Ongoing Challenges
Porter commended Pakistan’s economic strides since mid-2023, noting a significant drop in inflation, a stabilized exchange rate, and a doubling of foreign reserves. He emphasized that these gains are a direct result of implementing effective policies. However, he cautioned that sustained growth requires the continuation of consistent monetary, fiscal, and exchange rate strategies, along with enhanced tax collection and public spending.
Last year marked a milestone for Pakistan as it achieved its first primary budget surplus in two decades. The new IMF programme aims to expand this surplus to 2% of GDP. To reach this goal, reforms targeting under-taxed sectors, including retail, will be essential.
Looking Ahead: Next Steps and Review Timeline
The next assessment of Pakistan’s loan agreement is set for March or April 2025, contingent upon the country’s performance by the end of 2024. The IMF programme is designed to bolster Pakistan’s macroeconomic stability and facilitate sustainable economic growth in the future.
(Includes inputs from online sources)
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