IMF promises – Cash-strapped Pakistan is set to receive a $1.1 billion loan tranche from the International Monetary Fund (IMF) after a key meeting of the international lender’s executive board on Monday, even as economists have warned that the country needs profound reforms to reduce its dependence on foreign financial assistance.
The approval came with firm words from the IMF. “For Pakistan to move from stabilization to a strong and sustainable recovery, the authorities must continue their policies and reform efforts, including strictly meeting fiscal targets while protecting the vulnerable. a market-determined exchange rate to absorb external shocks & expanding structural reforms to support stronger and more inclusive growth,” the organization said in a statement.
The bailout followed a meeting between Pakistani Prime Minister Shehbaz Sharif & IMF Managing Director Kristalina Georgieva on the sidelines of the World Economic Forum meeting in Riyadh on Sunday.
IMF promises Pakistan
Hours after the IMF approved the financing, Sharif said Tuesday that the disbursement would bring greater economic stability to Pakistan. The IMF bailout was important in saving the country from default, the country’s state broadcaster quoted the prime minister as saying.
In June last year, Sharif was able to avoid a sovereign default when he secured an IMF bailout, raising current foreign exchange reserves to nearly $8 billion, according to the latest central bank data.
Pakistan has been reeling from a severe economic crisis for more than two years, with inflation at one point soaring to nearly 38 percent and its foreign exchange reserves depleted to $3 billion by February 2023, enough to cover less than five weeks of imports.
Khaqan Najeeb, a former adviser to the Ministry of Finance, told Al Jazeera that the performance of Pakistan’s $350 billion economy over the past nine months has shown that the country’s scarce foreign reserves have increased & that inflation, which was 20 percent in March, it has been reduced although slowly.IMF promises
“Broadly speaking, we can define Pakistan’s economic situation as macro-stabilization, which is aIMF promises consequent effect of adjustment policies, but it also means that growth is expected to remain sluggish and hover around 2 percent,” he said.