The International Monetary Fund (IMF) has scheduled Pakistan for review on its Executive Board agenda for September 25. Prime Minister Shehbaz Sharif has praised the support from friendly nations that helped Islamabad secure the $7 billion Extended Fund Facility (EFF).
An agreement on the 37-month loan program was reached in July. The IMF stated that the program requires approval from its executive board and the “timely confirmation of necessary financing assurances” from Pakistan’s development and bilateral partners.
Pakistan needed to secure $2 billion in external financing from bilateral and commercial lenders to meet the IMF’s approval conditions. Reports indicate that Pakistan currently owes $5 billion to Saudi Arabia and holds $4 billion in deposits from China and $3 billion from the UAE. Additionally, Pakistan has $4.5 billion in commercial loans, including those from China.
IMF spokesperson Julie Kozack confirmed that the board meeting is set for September 25 to discuss the approval of the $7 billion EFF agreement. This follows Pakistan obtaining necessary financing assurances from its development partners. The new EFF arrangement follows the successful completion of a nine-month standby arrangement in 2023.
Kozack highlighted that the permanent implementation of the new EFF is crucial for sustainable development. She noted that consistent policymaking has supported Pakistan’s economic stability, including growth resumption, significant disinflation, and a notable increase in international reserves.
Finance Minister Muhammad Aurangzeb welcomed the development, stating that all issues with the IMF have been resolved amicably. He expressed gratitude to Prime Minister Shehbaz Sharif’s team, IMF negotiators, and relevant institutions. Aurangzeb also indicated that the country’s economy is stabilizing and moving towards growth, with expected benefits from reduced policy rates including increased investment and job creation. He noted that the reduction in inflation is already providing relief to the public.
State Bank of Pakistan (SBP) Governor Jameel Ahmad announced that Pakistan has secured over $2 billion in financing from sources other than the IMF, viewing this external funding as the “final hurdle” for the loan program. He expressed confidence that no further obstacles remain in presenting Pakistan’s case to the board.
Additionally, Pakistan has increased its tax revenue target by a record 40% and raised energy prices to meet IMF demands. The country’s previous $3 billion loan program was completed in April, and recent credit rating upgrades from Moody’s and Fitch Ratings in August have further supported its financial outlook. The IMF program is expected to provide financial certainty for Pakistan over the next two to three years.
Prime Minister Shehbaz Sharif commended the progress with the IMF and the support from allied nations, emphasizing the need for Pakistan to become self-sufficient. He expressed hopes that the forthcoming IMF package would be the last and appreciated the SBP’s decision to cut the policy rate by 2% to boost investor confidence. The Prime Minister aims for the policy rate to match the inflation rate eventually.
Pakistan has frequently relied on IMF programs over the years, occasionally nearing sovereign default and seeking financial assistance from countries such as the UAE and Saudi Arabia to meet IMF targets.
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