IMF approves $1.2 billion for cash-strapped Pakistan to give major support to its recovering economy
PTC Web Desk: The International Monetary Fund (IMF) has approved the release of $1.2 billion to Pakistan, giving the struggling economy a strong boost as the country works to recover from one of its worst financial crises in years.
In its statement, the IMF said its executive board has completed two reviews of Pakistan’s economic programmes. This has cleared $1 billion under the main loan programme and an additional $200 million under a special climate-related programme.
With this new approval, Pakistan has now received about $3.3 billion from the IMF since last year. The full bailout plan will provide money to Pakistan over 37 months, but only if the government continues to follow the agreed reforms.
For many years, Pakistan has depended on IMF loans and assistance from friendly countries to meet its financial needs.
Prime Minister Shehbaz Sharif welcomed the IMF decision. He said it shows that Pakistan is implementing important reforms and working hard to stabilise and grow the economy after almost defaulting last year. He also praised Army Chief Field Marshal Gen. Asim Munir for supporting the government’s reform agenda. In addition, Sharif appreciated the efforts of Finance Minister Muhammad Aurangzeb and his team for pushing difficult but necessary changes. He said Pakistan’s reform and digital efforts have now become a global “case study,” but warned that achieving long-term growth will need more hard work.
The IMF said Pakistan has made “significant progress” even though the global economic situation is tough and the country suffered heavy floods this year. It noted that Pakistan’s fiscal position is stronger, foreign exchange reserves have increased to $14.5 billion, and economic growth has improved. Inflation has risen recently due to flooding and higher food prices, but the IMF expects it to come down.
The bailout, approved in 2024, aims to rebuild Pakistan’s reserves, improve the tax system and fix loss-making state-owned companies, especially in the energy sector. The separate climate facility will help Pakistan in improving disaster management, better water use and reporting on climate-related financial risks.
IMF Deputy Managing Director Nigel Clarke said Pakistan must remain disciplined because the future is uncertain. He praised the government’s work on meeting next year’s budget goals and managing flood damage. He also urged Pakistan to keep monetary policy tight, allow the exchange rate to move freely and continue long-delayed energy sector reforms.
- With inputs from agencies
