Pakistan has secured significant financial aid from China, Saudi Arabia and the United Arab Emirates as part of a recent deal with the International Monetary Fund (IMF).
Pakistan has secured significant financial aid from China, Saudi Arabia and the United Arab Emirates as part of a recent deal with the International Monetary Fund (IMF). IMF officials said the assistance would extend beyond the $12 billion in bilateral loans Islamabad already owes these countries.
Financial guarantees beyond debt rollovers
Nathan Porter, head of the IMF’s delegation to Pakistan, did not specify the amount of the additional loan, but confirmed it would complement an existing debt rollover agreement. “The UAE, China and the Kingdom of Saudi Arabia have all provided significant loan guarantees as part of this programme,” he told a press conference.
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The development followed the IMF Board’s approval of a new $7 billion, 37-month loan program for Pakistan, announced on Wednesday. The program aims to stabilize the nation’s economy through sound policies and reforms, with $1 billion in spending released immediately.
Economic progress and ongoing challenges
Porter praised Pakistan’s economic progress since mid-2023, pointing to a significant decline in inflation, stable exchange rates, and a doubling of foreign exchange reserves. He emphasized that these gains are a direct result of effective policy implementation. But he cautioned that sustained growth requires continued consistent monetary, fiscal and exchange rate strategies, along with stronger tax collection and public spending.
Last year was a landmark year for Pakistan as it achieved its first primary budget surplus in 20 years. The new IMF program aims to increase this surplus to 2% of GDP. To achieve this goal, reforms targeting tax-starved sectors, including retail, will be essential.
Looking ahead: next steps and review schedule
The next evaluation of Pakistan’s financing agreement is scheduled for March or April 2025, depending on Pakistan’s performance by the end of 2024. IMF programs are designed to strengthen Pakistan’s macroeconomic stability and foster future sustainable economic growth.
(Includes input from online sources)
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