Pakistan has received substantial financial support from China, Saudi Arabia and the United Arab Emirates as part of a new agreement with the International Monetary Fund (IMF). The financial assurances provided by these nations go beyond the rollover of $12 billion in bilateral loans already owed to them by Islamabad, an IMF official announced on Thursday.
Financial Support Linked To IMF Agreement
Nathan Porter, IMF Mission Chief for Pakistan, did not disclose the exact amount of additional financing but stated that the support is in addition to the debt rollover agreement. Porter mentioned during a press call that the UAE, China and the Kingdom of Saudi Arabia all provided significant financing assurances as part of this programme.
This announcement follows the IMF Executive Board’s approval of a new $7 billion, 37-month loan programme for Pakistan on Wednesday. The programme aims to stabilise Pakistan’s economy through sound policies and reforms and has already resulted in the immediate release of a $1 billion disbursement.
Economic Turnaround And Future Challenges
Porter praised Pakistan’s economic progress since mid-2023, noting a sharp decrease in inflation, a stabilised exchange rate, and a doubling of foreign reserves. He noted that these improvements reflect the benefits of implementing sound policies. However, he highlighted the need for sustained growth by maintaining consistent monetary, fiscal, and exchange rate policies, as well as improving tax collection and public spending.
Last year, Pakistan achieved its first primary budget surplus in 20 years, and the new IMF programme sets a target of expanding that to 2% of GDP. Reforms to improve tax revenue from under-taxed sectors, such as retail, will be crucial to meeting this target.
Next Steps And Loan Review
The next review of Pakistan’s loan agreement is scheduled for March or April 2025, based on the country’s performance at the end of 2024. The IMF programme aims to help Pakistan strengthen its macroeconomic stability and pave the way for more sustainable economic growth.
(With inputs from Reuters)
