ISLAMABAD: The International Monetary Fund (IMF) executive board has announced to discuss a $7 billion loan program agreed upon with Pakistan earlier this year on September 25.
Pakistan reached a staff-level agreement with the IMF in July, but the board’s approval for the 37-month loan program has been pending since then. The previous $3 billion IMF program was crucial in helping Pakistan avert a sovereign default last year amid a severe decline in foreign exchange reserves, currency depreciation, and soaring inflation.
IMF spokesperson Julie Kozack confirmed the board meeting date, noting it comes after Pakistan secured necessary financing assurances from its development partners.
Prime Minister Sharif expressed his gratitude to “friendly and brotherly” countries during a federal cabinet meeting, acknowledging the efforts of various stakeholders, including the finance minister, government institutions, and Pakistan’s ambassador to China. However, he did not provide specific details about the support received.
Historically, Pakistan has relied on financial aid from China, Saudi Arabia, and the United Arab Emirates to meet its external financing needs and avoid default. On Thursday, Pakistan’s sovereign dollar bonds experienced a slight uptick, with the 2031 maturity trading at 79.93 cents on the dollar.
Sharif emphasized that aligning the monetary policy rate with the inflation rate could significantly benefit Pakistan’s economy. He also mentioned that discussions with the IMF are moving forward positively, with decisions on growth rates expected once the program is finalized.
Pakistan has faced recurring economic difficulties, resulting in 22 IMF bailouts since 1958. The current economic crisis, marked by unprecedented inflation, has pushed the country to the brink of default before securing the latest IMF bailout. The new bailout conditions impose stricter measures, including increased taxes on farm incomes and higher electricity prices, aimed at ensuring stability and fostering inclusive growth in the crisis-stricken nation.
