The International Monetary Fund (IMF) has announced a staff-level agreement with Pakistan for a 37-month Extended Fund Facility (EFF) of around $7 billion. This announcement was made early Saturday morning, Pakistan time, with the IMF praising Pakistan for adhering to the terms set out in the Stand-by Arrangement (SBA) signed by the Shehbaz Sharif-led PDM government in 2023.
Under this agreement, Pakistan will receive the funds over the next three years, provided it meets the commitments made to the IMF. These commitments include broadening the tax base to ensure more comprehensive taxation and privatizing state-owned enterprises to enhance efficiency. Additionally, Pakistan must secure further loans from its key allies, including China, Saudi Arabia, and the UAE.
The IMF’s statement noted that the new EFF program builds on the economic stability achieved under the 2023 SBA. The agreement is subject to approval by the IMF’s Executive Board. The primary objective of this program is to improve macroeconomic stability and create conditions for stronger, more inclusive, and resilient economic growth in Pakistan.
Key measures under the program include strengthening fiscal and monetary policies, broadening the tax base, improving the management of State-Owned Enterprises (SOEs), enhancing competition, and ensuring a level playing field for investment. Additionally, the program aims to improve human capital and scale up social protection through increased generosity and coverage in the Benazir Income Support Program (BISP).
The IMF emphasized the importance of continued strong financial support from Pakistan’s development and bilateral partners, stating that this support will be critical for achieving the program’s objectives. The program is designed to foster economic reforms that will lead to a more robust and stable economic environment in Pakistan.
