Islamabad: The International Monetary Fund (IMF) has approved a new 37-month Extended Fund Facility for Pakistan worth SDR 5,320 million (approximately US$7 billion), with an initial disbursement of SDR 760 million (US$1 billion). This financial support aims to foster macroeconomic stability through robust policies and structural reforms, ensuring sustainable and inclusive economic growth.
According to AKD Securities Limited, the IMF's recent Article IV consultation has led to the recognition of Pakistan's efforts under its previous 9-month Stand-By Arrangement, which significantly bolstered the country’s economic stability. Pakistan's GDP growth rate has rebounded to 2.4% for the fiscal year 2024, and inflation has considerably reduced to single digits. This has been attributed to disciplined monetary and fiscal policies, which also helped in containing the current account deficit and stabilizing the market, allowing the central bank to cut the policy rate by 450 basis points since June 2024.
The IMF has placed a strong emphasis on addressing structural issues that restrict business environment improvements and investment due to poor governance and an oversized state role. The suggested reforms include restructuring state-owned enterprises, enhancing fair competition, and strengthening governance and anti-corruption measures. These reforms are expected to tackle challenges like low productivity, economic insularity, resource misallocation, and climate vulnerabilities.
Additionally, the IMF directors underscored the importance of maintaining a flexible exchange rate to absorb economic shocks and support foreign reserves accumulation. They also called for strengthened regulatory frameworks in banking and continuous improvement in anti-money laundering and counter-terrorism financing measures.
The new Extended Fund Facility prioritizes restoring policy credibility, enhancing productivity and competitiveness, restructuring state-owned enterprises, and strengthening climate resilience as its four main pillars.