Pakistan Borrows Even More As Debt From IMF Spirals To $1.9B Amid Economic Crisis

The executive board of the International Monetary Fund (IMF) has approved an immediate disbursement of around $700 million (₹5,810 crore) for Pakistan.

What Happened: This disbursement is part of a broader program aimed at supporting the South Asian country through an ongoing economic crisis. The funds were made available after the IMF board approved the first review of a nine-month, $3 billion (₹24,903 crore) loan agreement that was initially reached in July 2023.

The primary goal of the loan is to assist Pakistan in navigating a balance-of-payments crisis and managing its substantial external debt.

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With this latest disbursement on Thursday, the total funds released under the agreement now stand at around $1.9 billion (₹15,765 crore), according to an official statement from the Fund.

IMF Deputy Managing Director, Antoinette Sayeh, highlighted the positive impact of Pakistan’s progress under the program, noting significant advancements in stabilising the economy following severe shocks.

Some Signs Of Recovery? She acknowledged tentative signs of economic activity picking up and external pressures easing. Sayeh emphasised the importance of continued strong ownership to sustain the current momentum and solidify the stabilisation of Pakistan’s economy.

The IMF reported that macroeconomic conditions in Pakistan have generally improved since the implementation of the program. The international organisation predicts economic growth for the current year at 2%. The fiscal position has strengthened, marked by increased foreign reserves and a broadly stable exchange rate.

However, despite these positive developments, consumer inflation in Pakistan remains elevated, rising by 29.7% in the year to December, according to the country’s statistics bureau. The IMF anticipates that inflation could decline to an annual rate of 18.5% by the middle of this year, provided that appropriate policy measures are implemented to tighten monetary conditions.

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Posted In: EconomicsInternational Monetary FundPakistan