IMF Greenlights $700 Million Aid Boost for Pakistan’s Economy

Pakistan has secured final approval for the disbursement of approximately $700 million in aid from the International Monetary Fund (IMF), providing a crucial boost to its struggling economy ahead of upcoming elections.

The IMF’s executive board approved the loan, with Pakistan’s dollar bonds experiencing significant gains in emerging markets. Antoinette Sayeh, IMF deputy managing director, acknowledged Pakistan’s progress in stabilizing its economy under the program, noting tentative signs of increased activity and easing external pressures.

The IMF projects Pakistan’s economy to grow by 2% in fiscal year 2024, rebounding from a contraction in the previous year. Despite the positive outlook, financial strain persists, and Pakistan may seek another IMF loan as the current nine-month program concludes in March. The funds are essential for securing financing from other creditors, such as Saudi Arabia. The IMF stressed the importance of a market-determined exchange rate, a tight monetary stance to control inflation, and the need to bolster foreign reserves, currently standing at $8.2 billion.

While the rupee has stabilized in recent months, the IMF has disbursed a total of about $1.9 billion under the program, emphasizing the necessity for economic measures to navigate external shocks and support sustained recovery.