IMF Approves a $7 Billion Loan for Pakistan to Help Ailing Economy

The executive board of the International Monetary Fund (IMF) has approved a new $7 billion loan for Pakistan, authorities said on Sept. 25, more than two months after the two sides said they had reached an agreement.
The funds are aimed at helping authorities strengthen fiscal and monetary policy, and reform and broaden the tax base to boost Pakistan’s economy.
Pakistan has been working on implementing conditions, which Prime Minister Shehbaz Sharif had previously called “strict” to secure the 37-month loan program agreed in July.
The IMF praised Pakistan for taking steps to restore economic stability, noting that the country’s growth is rebounding, inflation has dropped to single digits, and a stabilized exchange market has led to the rebuilding of reserve cash buffers.
“I want to congratulate the government of Pakistan and the people of Pakistan for moving forward with the home-defined, Pakistan-owned reforms and they are bringing fruits,” she said. “Growth is up, inflation is down, and the economy is on a sound path.”
The funds will also be used to improve State Owned Enterprises’ (SOE) management, strengthen competition, secure a level playing field for investment, enhance human capital, and scale up social protection through increased generosity and coverage in the Benazir Income Support Program (BISP), according to the IMF.
Georgieva said the Pakistan government “aims to collect taxes from the rich and is strengthening the Benazir social program to support the poor.”
The IMF warned that Pakistan’s vulnerabilities and structural challenges remain an issue, with a difficult business environment, weak governance, and a narrow tax base identified as particular problems of note.
“Spending on health and education has been insufficient to tackle persistent poverty, and inadequate infrastructure investment has limited economic potential and left Pakistan vulnerable to the impact of climate change,” the IMF said.
The IMF said the new program will require “sound policies and reforms” alongside “continued strong financial support from Pakistan’s development and bilateral partners”.
Sharif welcomed the deal, thanking Georgieva, the IMF, and other countries for helping to facilitate it.