The International Monetary Fund (IMF) has approved a new $7 billion loan for Pakistan, a country grappling with severe economic challenges. This approval comes more than two months after both parties announced they had reached an agreement on the loan program.
Prime Minister Shehbaz Sharif praised the deal, which his administration has been negotiating since June, and expressed gratitude to IMF Managing Director Kristalina Georgieva and her team. The loan is part of a 37-month program that Pakistan hopes will be its last, as the country implements stringent conditions set by the IMF.
Sharif indicated that Pakistan has met all the IMF's requirements, aided by support from China and Saudi Arabia, although he did not specify the nature of this assistance. As of earlier this month, Pakistan's external debt exceeded $130 billion, with nearly 30% owed to China, which is seen as both a close ally and a rival to Western interests.
Pakistan faces nearly $90 billion in repayments over the next three years, with a significant payment due by December. The government has committed to increasing tax revenue in accordance with IMF stipulations, despite facing protests from retailers and opposition parties regarding new tax measures and high electricity costs.
Pakistan has a long history of economic instability, having undergone 22 IMF bailouts since 1958. Currently, it ranks as the IMF's fifth-largest debtor, with $6.28 billion owed as of July 11. The ongoing economic crisis has led to record-high inflation, pushing the country to the brink of sovereign default last summer before securing this IMF bailout. Although inflation has eased somewhat, credit rating agency Moody's has recently upgraded Pakistan's ratings, citing improving macroeconomic conditions.