IMF and Pakistan Reach Preliminary Agreement on $7 Billion Economic Support Package

Islamabad: The International Monetary Fund (IMF) has reached a staff-level agreement with Pakistan on a 37-month Extended Fund Facility, poised to inject approximately US$7 billion into the country’s economy. The agreement, announced following discussions led by IMF’s Mission Chief to Pakistan, Nathan Porter, aims to support Pakistan’s policy and reform plans over the medium term.

According to International Monetary Fund, the comprehensive program has been endorsed by both federal and provincial governments and is awaiting final approval from the IMF’s Executive Board. The funding, equivalent to SDR 5,320 million, is contingent upon Pakistan securing necessary assurances from its development and bilateral partners.

The program is designed to build on Pakistan’s recent economic stabilization efforts by enhancing public finances, curbing inflation, and fostering private sector-led growth. Notably, the initiative includes fiscal consolidation measures intended to increase tax revenues by approximately 1.5% of GDP in FY25, with a focus on broadening the tax base and removing exemptions. The approved FY25 budget also targets a primary surplus, and provisions have been made to expand social protections, including increased allocations for the Benazir Income Support Programme (BISP), education, and health.

Additionally, the agreement encompasses a rebalancing of fiscal responsibilities between the federal and provincial governments in accordance with the 18th constitutional amendment, including enhanced provincial tax collection efforts. It also emphasizes monetary policies aimed at disinflation and financial stability, along with reforms in the energy sector and initiatives to boost the private sector and exports.

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