Pakistan Lent USD 7 Billion by IMF to cope ‘Economic Crisis’

Pakistan and International Monetary Fund (IMF) have reached a mutual consensus of provision for a 37 months period Financial Aid of USD 7 Billion to solve their contemporary national pecuniary difficulties.

Pakistan’s Debt Story

The Russian invasion on Ukraine in the year 2022, caused severe spike in the inflation rate along with political instability and low per capita income. This has caused issues like problems of Balance of Payments for the country as well as ever-rising burden of external and international debts. There was restriction on import of luxury and unnecessary items declared by the incumbent government in the country.

The debt has substantially increased from USD 11 Billion in 1999 to a massive amount of USD 220 Billion till the end of Imran Khan’s government. China lent Pakistan a whopping aid of around USD 700 Million in February 2023 and another USD 1.3 Billion in the very next month. In May 2023, Pakistan had surpassed Sri Lanka to have highest inflation rate of around 38% in Asia.

Pakistan to approve the Loan

The cash-strapped country got a bail of USD 6 Billion in the year 2019 from IMF but due to an uncertain hold over the release of a key installment, the transaction was paused. The federal budgets of 2022-2023 as well as of 2023-2024 did not satisfy the global fund agency for the revival of the bailout. Later, a revised Budget was presented by the country on 25 June. Pakistan was desperately waiting for the approval of this fiscal budget. 5 days later, it was approved by the executive board of IMF.

It said, “Building on the economic stability achieved under the 2023 Stand-By Agreement (SBA), IMF staff and the Pakistani authorities have reached a staff level agreement on a 37-month Extended Fund Facility of about USD 7 Billion.” The global agency further said that this provision is regarding strengthening of the country’s fiscal and monetary policies and also to stabilize macroeconomic conditions along with reducing inflation rates. IMF also called out Pakistan’s potential partners’ critical financial support for the country’s further economic development.