The International Monetary Fund has ratified a $1.3 billion loan for Pakistan under the Climate Resilience and Sustainability Facility. The funding is mainly ratified to support the country’s efforts in tackling climate change while ensuring key economic reforms. Additionally, the IMF has also cleared the release of $1 billion under the already agreed $7 billion Extended Fund Facility, bringing the total disbursements to $2.3 billion.
Economic Reforms followed by Pk are highly acknowledged by the IMF
The declaration came following discussions between Pakistan’s Finance Minister Muhammad Aurangzeb and IMF Mission Chief Nathan Porter in Islamabad. The IMF admired all the efforts and dedication of Pak to counterbalance its economy despite global challenges.
“Over the past 18 months in an arduous environment, Pakistan progressed in reigniting macroeconomic stability and rebuilding confidence,” said Nathan Porter in an official statement.
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While economic growth remains moderate, the IMF highlighted various positive developments, including:
• Declining inflation, now at its lowest level since 2015
• Improved financial conditions, improving investor confidence
• Narrowed sovereign spreads, indicating better creditworthiness
• Stronger external balances, minimizing the risk of default
Breakdown of the Loan Agreements
The IMF’s latest agreement with Pakistan extends over 28 months under the Climate Resilience and Sustainability Facility. This initiative is designed to help countries implement climate-related reforms while ensuring financial stability.
In addition to this new facility, the IMF also reached a staff-level agreement (SLA) with Pakistan on the first review of the 37-month Extended Fund Facility (EFF). The SLA paves the way for Pakistan to access another $1 billion, bringing the total amount received under the bailout program to $2 billion.
Nathan Porter stated:
“Upon approval (by the IMF board), Pakistan will have access to about $1 billion under the EFF, bringing total disbursements under the program to about $2 billion.”
Boost for Pakistan’s Economy
The ratification of fresh funding is anticipated to deliver relief for Pakistan’s struggling economy, particularly in addressing climate challenges and improving the balance of payments. As per Radio Pakistan, the latest agreements of IMF highly admire Pakistan’s progress in tax reforms, monetary stability, energy sector transformation, and climate resilience.
Pakistan can continue its economic recovery efforts with this financial aid, ensuring greater financial stability and long-term sustainability while addressing the pressing issue of climate change.