Prime Minister Shehbaz Sharif welcomed the IMF’s decision to approve a $7 billion loan program for Pakistan, his office announced on Wednesday. The IMF granted the bailout package after Pakistan committed to tightening fiscal and monetary policies, implementing reforms to expand the tax base, ensuring fair competition for investment, and boosting human capital.
In July, the IMF reached a staff-level agreement with Pakistan on economic policies under the 37-month Extended Fund Facility (EFF) worth approximately $7 billion. The executive board has now approved the country’s 25th loan program since 1958. Expressing his satisfaction with the approval, the prime minister reaffirmed his commitment to pursuing economic growth targets. He emphasized that if the country maintains its efforts, this could be the last IMF program Pakistan would need. He also thanked Saudi Arabia, China, and the UAE for their support in securing the loan.
Economists have welcomed the IMF loan as a positive step that will boost investor confidence and enable Pakistan to access international markets for commercial borrowing. Dr. Khaqan Hassan Najeeb, a senior economist and former government adviser, noted that engagement with the IMF could reinforce Pakistan’s fragile macroeconomic stability. He emphasized that the program would ensure Pakistan’s gross financing needs of $26 billion are met, bringing other lenders, including commercial banks and bilateral and multilateral partners, on board. He also highlighted that the program would give Pakistan the time and space needed to implement structural reforms to avoid relying on the IMF in the future.
Ahsan Mehanti, CEO of Arif Habib Corporation, praised the IMF loan approval as a significant development, pointing out that it would unlock bilateral and multilateral support, including a $2 billion loan from the Asian Development Bank. He also predicted that the program would bolster investor confidence, boost the stock market, and stabilize the Pakistani rupee against the U.S. dollar.
In its statement, the IMF said the three-year loan program would require robust policies and reforms to support Pakistan’s ongoing efforts to strengthen its economy and foster conditions for more inclusive, resilient growth. While acknowledging Pakistan’s progress in restoring economic stability through consistent reforms, the IMF highlighted that the country still faces significant structural challenges. These include a difficult business environment, weak governance, and an oversized role of the state, which hinder investment compared to other countries.
IMF Chief Kristalina Georgieva also briefly met with Prime Minister Shehbaz Sharif during the 79th United Nations General Assembly session. She told the media that the IMF had successfully completed the program review, congratulating Pakistan’s government and citizens on their progress with home-grown reforms. Georgieva pointed out that growth is improving, inflation is decreasing, and the economy is on a stronger footing. She also noted that the government aims to increase tax collection from the wealthy while strengthening the Benazir Income Support Program to assist those in need.
