The International Monetary Fund (IMF) said on Friday that it has reached a staff level agreement (SLA) with Pakistan for a $7-billion, 37-month loan programme aimed at cementing stability and inclusive growth.
The IMF said the new Extended Fund Facility (EFF) is subject to approval by its Executive Board and obtain “timely confirmation of necessary financing assurances from Pakistan’s development and bilateral partners.”
This would include rollovers or disbursements on loans from Pakistan’s long-time allies Saudi Arabia, the United Arab Emirates and China.
“Building on the economic stability achieved under the 2023 Stand-by Arrangement (SBA), IMF staff and the Pakistani authorities have reached a staff-level agreement … of about US$7 billion,” the IMF said in its press release.
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The new programme will include steps to strengthen fiscal and monetary policy and reforms to broaden the tax base, improve State Owned Enterprises’ (SOE) management, strengthen competition, secure a level playing field for investment, enhance human capital, and scale up social protection through increased generosity and coverage in the Benazir Income Support Program (BISP), the IMF added.
“Continued strong financial support from Pakistan’s development and bilateral partners will be critical for the programme to achieve its objectives.”
The deal caps negotiations that started in May after Islamabad completed the previous short-term SBA that helped stabilise the economy and avert a sovereign debt default.
IMF will continue to discuss policy goals and actions
“The program aims to capitalise on the hard-won macroeconomic stability achieved over the past year by furthering efforts to strengthen public finances, reduce inflation, rebuild external buffers and remove economic distortions to spur private sector led growth,” IMF Pakistan Mission Chief Nathan Porter was quoted as saying.
Pakistan’s Minister of State for Finance, Revenue and Power Ali Pervaiz Malik had said last week that Pakistan had been aiming for a new loan deal before the IMF Executive Board takes its annual recess in August. The IMF’s statement did not include any details on timing of board consideration of the deal.
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