ISLAMABAD, Sep 26 (Alliance News) – The International Monetary Fund (IMF) has approved a 37-month Extended Fund Facility (EFF) program worth $7 billion for Pakistan, authorizing the immediate release of the first tranche of approximately $1 billion.
The agreement between Pakistan and the IMF was finalized in July this year, marking a significant step in the country’s economic recovery efforts.
According to an IMF press release, the new program necessitates sound policies and reforms aimed at enhancing macroeconomic stability, addressing profound structural challenges, and fostering conditions for stronger, more inclusive, and resilient growth.
The continued financial support from Pakistan’s development and bilateral partners will be crucial for the program’s success.
The statement noted that Pakistan has made significant strides in restoring economic stability through consistent policy implementation under the 2023-24 Stand-by Arrangement (SBA).
Economic growth is projected to rebound to 2.4 percent in FY24, largely driven by activity in agriculture. Moreover, inflation has notably decreased to single digits, supported by appropriately tight fiscal and monetary policies.
A more stable current account and calm foreign exchange market conditions have facilitated the rebuilding of reserve buffers.
Reflecting disinflation and improved domestic and external conditions, the State Bank of Pakistan has reduced the policy rate by a total of 450 basis points since June, bolstered by a tight budget for FY25.
Despite these advancements, the IMF cautioned that Pakistan still faces significant vulnerabilities and structural challenges.
In light of the stability achieved under the 9-month 2023 SBA, the government is committed to addressing these challenges and building resilience for sustainable growth.
Key priorities under the new EFF-supported program include:
- Rebuilding policymaking credibility and entrenching macroeconomic sustainability through the consistent implementation of sound macro policies and broadening the tax base.
- Advancing reforms to enhance competition and increase productivity and competitiveness.
- Reforming state-owned enterprises (SOEs) to improve public service delivery and the viability of the energy sector.
- Building climate resilience.
Earlier, during a virtual address at the “High Level Private Sector Dialogue – CPEC-II and the Region,” Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, reaffirmed Pakistan’s commitment to implementing structural reforms under the IMF program.
He emphasized the importance of maintaining the reform agenda in areas such as taxation, the energy sector, state-owned enterprises, and privatization, asserting, “We will stay on course.”
