Pakistan Secures $700 Million IMF Loan Amidst Economic Crisis

Amidst an economic crisis, Pakistan has obtained a $700 million loan from the International Monetary Fund (IMF), as reported by Geo News citing the governor of the State Bank of Pakistan (SBP), Jameel Ahmed.

The IMF's approval, announced after completing their initial review, brings Pakistan's received funds to nearly $1.9 billion from the $3 billion Standby Arrangement (SBA).

The nine-month SBA, starting in July last year, provides a policy anchor to manage domestic and external imbalances, and supports financial aid from other partners.

To ensure the rescue package, Pakistan adopted strict IMF-recommended measures, such as a revised budget, significant interest rate increases, and substantial hikes in electricity and gas prices.

Additionally, to fulfill fiscal adjustments, Pakistan agreed to introduce $1.34 billion in new taxes, which contributed to a severe inflation spike, peaking at 38% year-on-year in May and remaining above 30%.

IMF Deputy Managing Director Antoinette Sayeh highlighted the crucial steps taken by Pakistan's authorities, particularly the energy pricing reforms necessary for the sector's sustainability and fiscal health.

Furthermore, the SBP has confirmed the United Arab Emirates' rollover of two $1 billion deposits maturing in January 2024, providing financial support to Pakistan.

Following the IMF staff-level agreement in November 2023 and board approval, Pakistan anticipates receiving further installments and potentially more loans from international partners. The current IMF program, with about $8 billion yet to be disbursed, is set to conclude in April 2024.

Finance Ministry officials believe that Pakistan has met all IMF objectives, anticipating the success of the enforced economic measures.

The country's total debt reached a staggering 63.399 trillion Pakistani Rupees (PKR) at the end of November in the financial year 2023-24, with an increase of over 12.430 trillion PKR during the PDM and caretaker government's tenure, as reported by ARY News.

Pakistan's debt comprises both domestic and international loans, totaling PKR 63.390 trillion as of November 2023.