The International Monetary Fund’s board of directors has approved a new $7 billion, three-year loan programme for Pakistan, in a package Islamabad has promised will be the last it will seek from the global financial body.
The fund said in a statement that this loan aims to support Islamabad’s efforts to strengthen its economy and “create conditions for stronger, more inclusive and resilient growth.”
Loan 24
Pakistan had approved the new loan last July, which is the 24th package the South Asian country has received from the International Monetary Fund since 1958.
Islamabad received the loan in exchange for adopting reforms that were widely opposed by the public, including expanding its chronically low tax base.
The government seeks to increase tax revenues by 1.5% of GDP in fiscal year 2025, and 3% of GDP during the bailout programme, in an attempt to save Pakistan’s ailing economy from collapse.
The government also aims to cut its fiscal deficit by 1.5% to 5.9% next year, in response to another key request from the International Monetary Fund.
On the brink of backwardness
Pakistan came to the brink of default last year as its economy contracted amid political chaos following catastrophic monsoon floods in 2022.
But the country was saved at the last minute thanks to loans from friendly countries and a rescue package from the International Monetary Fund.
However, the country’s public finances remain in a dire state, with the economy suffering from high inflation rates, huge public debt and decades of corruption.
