IMF Approves $7bn Loan to Support Pakistan’s Economy

The International Monetary Fund (IMF) has granted a $7bn (£5.25bn) loan to Pakistan to help address its financial crisis. The first $1bn will be disbursed immediately, with the remaining funds distributed over three years. Prime Minister Shehbaz Sharif expressed gratitude to IMF Managing Director Kristalina Georgieva and her team for their support.

Pakistan, which has borrowed from the IMF more than 20 times since 1958, is currently its fifth-largest debtor. The IMF stressed that the new loan program requires sound policies and reforms to stabilize Pakistan’s economy and enhance its resilience. The Pakistani government has committed to making this the final loan from the IMF, as part of a broader effort to reform the economy.

As part of the agreement, Pakistan has implemented unpopular measures, such as increasing tax revenues from individuals and businesses. Decades of financial mismanagement have left the country reliant on IMF loans to meet its economic needs. In 2022, Pakistan narrowly avoided defaulting on its debts and had barely enough foreign reserves to cover a month of imports.

In July 2023, the IMF approved a $3bn bailout for Pakistan, which was bolstered by additional financial support from Saudi Arabia and the UAE. At the time, Prime Minister Sharif called the IMF deal a crucial step towards stabilizing the economy, helping Pakistan address both immediate and medium-term financial challenges.