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IMF Approves New $1.3B Loan Program for Pakistan
The International Monetary Fund (IMF) announced Tuesday that it has reached an agreement with Pakistan for a new $1.3 billion loan program, alongside a review of an existing bailout that could unlock an additional $1 billion in funds.
The 28-month agreement is designed to support Pakistan’s efforts to address climate change and stabilize its economy. Both the new program and the loan review still require approval from the IMF’s executive board, a step expected to be a formality.
In 2023, Pakistan faced a near-default crisis, exacerbated by political instability and economic downturn, which pushed its debt to unsustainable levels. A $7 billion IMF bailout helped stabilize the nation, easing inflation and boosting foreign exchange reserves.
However, the deal came with strict conditions, including raising income tax revenues and cutting power subsidies to improve the efficiency of the energy sector.
On Tuesday, the IMF noted that Pakistani authorities are committed to fiscal reforms aimed at reducing public debt, alongside measures such as tight monetary policy and cost-cutting strategies.
If approved, the loan review would grant Pakistan access to $1 billion in additional funds, bringing total disbursements under the current program to $2 billion.
IMF mission chief Nathan Porter praised Pakistan’s progress, stating, “Despite a challenging global environment, Pakistan has made significant strides in restoring macroeconomic stability and rebuilding confidence over the past 18 months.”