IMF gives Pakistan a $1 billion loan tranche.

The International Monetary Fund (IMF) approved a $7 billion loan for Islamabad under the Extended Fund Facility and disbursed the first tranche of $1 billion to Pakistan after the board meeting. Pakistan’s new loan scheme has a 37-month duration.

The IMF stated in an official announcement that Pakistan’s economic growth rate had reached 2.4. Nonetheless, the nation continues to confront significant obstacles, such as a challenging business climate, inadequate governance, and a small tax base.

The statement claims that for the previous year, Pakistan has consistently carried out standby arrangement policies, making significant progress towards re-establishing economic stability. The FY 2024 growth rate of 2.4% is a result of higher agricultural sector activity.

Additionally, the IMF stated that inflation has dropped to a single digit. Prudent monetary and fiscal policies have helped in reducing the current account deficit and rebuilding foreign exchange reserves. Improvements in both internal and external conditions are reflected in the decrease in inflation.

To help the situation even more, the State Bank has lowered the policy rate by 450 basis points since June. In June 2024, Pakistan presented a robust budget, which was applauded by the IMF.

The IMF also emphasised that poor investment in infrastructure has restricted the nation’s economic potential and that insufficient spending on health and education is insufficient to overcome poverty. Pakistan is susceptible to the consequences of global warming as well.

The IMF stressed the necessity of making the necessary adjustments to reforms and cautioned Pakistan against slipping farther behind other nations in the absence of reforms. Development partners’ ongoing financial support will be crucial to the program’s success.