IMF Releases First Tranche of $1 Billion to Pakistan Under $7 Billion Loan Program

The International Monetary Fund (IMF) has disbursed the first tranche of $1 billion to Pakistan as part of a $7 billion loan package approved under the Extended Fund Facility (EFF). The new loan program, which spans 37 months, aims to support Pakistan’s economic recovery amid ongoing challenges.

In an official statement, the IMF noted Pakistan’s economic growth rate has reached 2.4% in the fiscal year 2024, largely driven by increased agricultural activity. However, the IMF also underscored the country’s persistent hurdles, including a challenging business environment, weak governance, and a narrow tax base.

Over the past year, Pakistan has implemented key economic policies under the Stand-By Arrangement, taking significant steps to restore stability. The IMF highlighted the success of these measures, citing a reduction in inflation to single digits and an improvement in the current account deficit. These positive outcomes have been supported by sound fiscal and monetary policies, which have also contributed to the rebuilding of foreign exchange reserves.

Since June, the State Bank of Pakistan has lowered its policy rate by 450 basis points, further bolstering economic conditions. The IMF praised Pakistan’s budget presented in June 2024, describing it as strong and focused.

Despite these improvements, the IMF stressed that insufficient spending on health, education, and infrastructure continues to hamper the country’s long-term growth potential. The report also warned that Pakistan remains vulnerable to the impacts of climate change, which could exacerbate its economic challenges.