Pakistan secures $7 billion IMF loan; China, Saudi Arabia, UAE pledge support: Report

Pakistan Economy: Pakistan has secured “significant financing assurances” from China, Saudi Arabia, and the United Arab Emirates (UAE), according to an official from the International Monetary Fund (IMF). These commitments extend beyond the rollover of $12 billion in bilateral loans owed to the three countries, per Reuters.

Nathan Porter, IMF's Mission Chief for Pakistan, refrained from specifying the additional financing amounts but confirmed that these assurances are part of the newly approved IMF program. 

“I won't go into the specifics, but UAE, China and the Kingdom of Saudi Arabia all provided significant financing assurances joined up in this programme,” Porter said during a press briefing. 

The IMF's Executive Board, on September 26, approved a $7 billion, 37-month loan agreement for Pakistan. The agreement mandates “sound policies and reforms” aimed at strengthening the country’s macroeconomic stability. As part of the deal, Pakistan will receive an immediate disbursement of $1 billion, the report added.

IMF acknowledges Pakistan’s remarkable economic recovery

Pakistan, which has a history of IMF bailouts, has now entered its 23rd programme since 1958. Despite the frequency of such interventions, Porter emphasised that the country's recent economic performance has been noteworthy. “Pakistan has staged a ‘really remarkable’ economic turnaround since mid-2023,” he noted. 

Porter attributed these gains to sound policy decisions and underscored the need for continued efforts to ensure sustainable growth. “So what we've seen is the benefits of undertaking good policies,” he said, stressing the importance of consistent monetary, fiscal, and exchange rate policies. He also pointed to the need for higher tax revenues and more efficient public spending.

Pakistan achieved its first primary budget surplus in two decades last year, and the IMF programme aims to increase this surplus to 2 percent of the GDP. According to Porter, this target will be partly met by improving tax collections from under-taxed sectors like retail.

The next review of Pakistan’s IMF loan programme is expected in March or April 2025, following the performance assessment at the end of 2024.

(With Inputs from Reuters)