Pakistan Secures $7 Billion IMF Loan to Revitalize Economy
In a significant move to stabilize its economy, the International Monetary Fund (IMF) has approved a new $7 billion loan package for Pakistan, marking the country's 24th financial assistance since 1958. This three-year program is designed to support Islamabad's efforts to strengthen its economy and foster inclusive growth. The IMF emphasized that the loan will help create conditions for stronger and more resilient growth in the South Asian nation.
The Pakistani government, which had already approved the loan in July, has committed to implementing reforms that are expected to be unpopular among the public. These reforms include expanding the tax base, which has been chronically low, with the objective of increasing tax revenues by 1.5% of GDP in fiscal year 2025 and by 3% of GDP during the bailout program. Additionally, the government aims to reduce its fiscal deficit from 7.4% to 5.9% next year, adhering to key IMF requests.
Pakistan's economy has faced severe challenges, including high inflation rates, substantial public debt, and a history of corruption. Last year, the country was on the brink of default, exacerbated by political turmoil and catastrophic monsoon floods. Fortunately, it avoided collapse through emergency loans from friendly nations and the timely IMF rescue package. Despite these measures, public finances remain precarious, underscoring the urgent need for effective economic reforms.
