The Executive Board of the International Monetary Fund (IMF) on Wednesday approved a $7 billion Extended Fund Facility (EFF) for Pakistan, with the country expected to receive the first tranche of $1.1 billion within this month.
The three-year program “will require sound policies and reforms” to support Pakistan’s ongoing efforts to strengthen its economy “and create conditions for a stronger, more inclusive, and resilient growth,” read a statement issued by the global lender.
Both Prime Minister Shehbaz Sharif and State Bank of Pakistan (SBP) Governor Jameel Ahmed confirmed the development. Ahmed said Islamabad would receive the first tranche of $1.1 billion by Sept. 30, adding the approval resulted from the country fulfilling all demands of the global lender.
In his statement, issued from the sidelines of the U.N. General Assembly in New York, the prime minister voiced satisfaction over the approval of the loan program and thanked IMF Managing Director Kristalina Georgieva and her entire team for their support. He also thanked “friendly” countries, particularly Saudi Arabia, China, and the United Arab Emirates, for helping Pakistan secure the bailout package.
Sharif stressed that the loan reflected the implementation of economic reforms, which are ongoing, adding the government would continue to work to achieve goals related to economic development and growth after reaching stability. He said it was heartening to see an increase in business activities and investment in the country, stressing this was testament to the hard work of his economic team.
“If the same hard work continues, God willing, this will be Pakistan’s last IMF program,” he reiterated.
Earlier, speaking to Geo News in New York, the IMF managing director had noted that Pakistan’s economy was a “sound path” with growth on the rise and inflation declining. She said she expected the benefits of the loan to reach the poorest Pakistanis, as the government had conveyed it would use taxes collected from the rich to strengthen the Benazir Income Support Program.
Pakistan’s bailout approval was pending since July when Islamabad inked a staff-level agreement with the IMF for a 37-month, $7 billion bailout. The key sticking point, per sources, was securing the confirmation of $12 billion in bilateral loans from Saudi Arabia, China and the U.A.E. as well as external financing of $2 billion. To secure the staff-level agreement, the government imposed a series of tough measures, including raising taxes and electricity and natural gas prices and vowing to expand the tax net.