The International Monetary Fund (IMF) has approved a $7 billion loan for Pakistan, providing a lifeline for the cash-strapped country. Prime Minister Shehbaz Sharif, who led the negotiations since June, expressed gratitude to IMF Managing Director Kristalina Georgieva and her team for their support.
Sharif, speaking on the sidelines of the United Nations General Assembly, highlighted the “strict” conditions imposed by the IMF for the 37-month loan program, which he hopes will be Pakistan’s final bailout. The Prime Minister acknowledged crucial support from China and Saudi Arabia, without specifying their contributions to securing the deal.
Pakistan’s external debt currently exceeds $130 billion, with nearly 30 percent owed to China, its closest ally. Over the next three years, the country is set to repay around $90 billion, with a major payment due by December. Financial assistance from allies and IMF loans have helped Pakistan meet its external obligations in the past.
To align with IMF requirements, the government has committed to raising its tax revenue, despite resistance from retailers and opposition parties over new tax policies and soaring electricity costs.
Pakistan has faced repeated boom-and-bust economic cycles, leading to 22 IMF bailouts since 1958. Currently, it ranks as the IMF’s fifth-largest debtor, owing $6.28 billion. The latest economic crisis, marked by record inflation, brought the country to the verge of default last year. While inflation has eased, Moody’s recently upgraded Pakistan’s credit rating, citing improved macroeconomic conditions and liquidity.