IMF Sanctions $1.3 Billion Loan for Pakistan
Click to start listening
Synopsis
The IMF has approved a $1.3 billion loan for Pakistan, aimed at aiding the nation in its climate change efforts. This agreement is part of a broader $7 billion bailout program, highlighting Pakistan's progress in macroeconomic stability despite global challenges.
Key Takeaways
- IMF approves $1.3 billion loan for Pakistan.
- Loan duration set for 28 months.
- Part of a larger $7 billion bailout program.
- Pakistan showing progress in controlling inflation.
- Geopolitical risks could threaten macroeconomic stability.
Islamabad, March 26 (NationPress) The International Monetary Fund (IMF) has finalized a staff-level agreement with Pakistan for a loan package of $1.3 billion over a duration of 28 months aimed at bolstering the nation’s initiatives to combat and adapt to climate change.
This new agreement coincides with the initial review of the ongoing $7 billion bailout program, with the IMF commending Pakistan for its advancements in restoring macroeconomic stability and rebuilding confidence amidst a challenging global backdrop.
As reported by governmental finance sources, Pakistan has demonstrated consistent progress in managing inflation, keeping it within a range of 1 percent to 1.5 percent during March.
"This follows a slowdown to its lowest level in nearly a decade in previous months," stated the monthly economic outlook report from the finance ministry.
Upon receiving approval from the IMF board, Pakistan will gain access to approximately $1 billion under the Extended Funding Facility (EFF), raising total disbursements under the program to around $2 billion, according to the IMF.
Muhammad Aurangzeb, Pakistan's Federal Minister for Finance, expressed optimism, attributing it to government policies aligned with IMF requirements.
"We are dedicated to maintaining our course and executing structural reforms in taxation, energy, and state-owned enterprises (SOEs) to set our nation on a path of sustainable productivity and export-led growth," he remarked.
The IMF EFF bailout package was crucial in preventing an imminent default of Pakistan’s economy. The $7 billion IMF bailout assisted the nation’s $350 billion economy in stabilizing, providing crucial relief for Islamabad to avoid total financial collapse.
"While economic growth remains moderate, inflation has decreased to its lowest level since 2015, financial conditions have improved, sovereign spreads have narrowed significantly, and external balances are stronger," the IMF reported.
The green light for the first review of the IMF EFF facility for Pakistan will facilitate securing $1 billion in advance of the annual budget.
Nonetheless, the IMF has acknowledged the country’s geopolitical context, cautioning that elevated downside risks, including geopolitical shocks to commodity prices, rising protectionism, and tightening global financial conditions, could jeopardize Pakistan’s hard-earned macroeconomic stability.
"Climate-related challenges persist as a significant hurdle for Pakistan, necessitating the development of resilience through adaptation measures. It is vital to remain committed to the progress made over the past one and a half years by further strengthening public finances, ensuring price stability, rebuilding external buffers, and eliminating distortions to support robust, inclusive, and sustained private sector-led growth," stated IMF mission chief Nathan Porter.
