In a significant economic development, the International Monetary Fund (IMF) and Pakistani authorities have reached a crucial staff-level agreement, poised for approval by the IMF’s Executive Board. Upon clearance, Pakistan stands to gain access to a substantial economic boost of SDR 528 million, approximately $700 million, as announced in a statement on Wednesday.
During the recent discussions held in Islamabad from November 2-15, Nathan Porter, leading the IMF team, highlighted that Pakistan’s stabilization program, supported by the $3 billion Stand-By Arrangement (SBA), is fostering a nascent recovery. The fiscal landscape is improving, marked by the execution of the FY24 budget, adjustments in energy prices, and renewed foreign exchange flows.
The priorities outlined under the SBA include continued fiscal consolidation, a strengthened social safety net, energy sector reforms, a market-determined exchange rate, proactive monetary policy, financial sector resilience, state-owned enterprise and governance reforms, and enhanced cooperation with international partners.
These measures aim to reduce public debt, protect the vulnerable through improved social protection, address costs in the energy sector, rebuild foreign exchange reserves, lower inflation, bolster the financial sector, and stimulate business environment improvements. The IMF team acknowledged the fruitful discussions and cooperation with Pakistani authorities, the private sector, and development partners during this mission.
This agreement comes at a crucial time for Pakistan, requiring ongoing efforts to build resilience and navigate external risks, including geopolitical tensions and global financial conditions. The anticipation is high for the IMF Executive Board’s approval, unlocking a significant financial infusion for Pakistan’s economic trajectory.