Pakistan praised the International Monetary Fund’s release of an additional $1.2 billion in loans to support its economic recovery and reforms program on Tuesday, citing it as proof of the “hard work” done in the wake of a two-year financial crisis.
At a meeting in Washington on Monday, the IMF authorized the funds, increasing the total amount given under two loan facilities—a bailout fund and a climate sustainability fund—to $3.3 billion.
“Pakistan’s reform implementation… has helped preserve macroeconomic stability in the face of several recent shocks” such as devastating flooding last summer, the fund’s deputy managing director Nigel Clarke said in a statement.
Economic growth is projected to rise to 3.2 percent in the fiscal year to June 2026, after an estimated 3.0 percent last year.
In the meantime, inflation is predicted to average 6.3 percent this fiscal year, a significant decrease from the average of 23.4 percent in the year ending in June 2024.
However, Clarke also advocated for ongoing funding for climate programs to lessen “vulnerability to extreme weather events” as well as additional reforms and privatizations of state-owned businesses.
Clarke praised a recent government-commissioned report on fraud as a “welcome step in accelerating government reforms” and stated that new initiatives are also required to address entrenched corruption.
Prime Minister Shehbaz Sharif described the fresh loans as “proof that Pakistan is implementing the necessary steps for economic stability and growth” in a statement.
“Bringing the country back from the brink of default and putting it on the path of stability and development was a difficult phase, for which everyone made sacrifices.”
Pakistan nearly defaulted on its massive debt in 2023 before securing the IMF bailout, called the Extended Fund Facility, that is to total $7 billion in the coming years.
As part of the deal it also pledged to tackle corruption including money-laundering and alleged financing of terrorism in the country.
In November the IMF published a review conducted at the request of the Pakistani government, which found “persistent and widespread corruption risks embedded in a heavily state-dominated economy”.
It noted the “significant adverse effects on economic growth, investment, and public trust”, urging “actions to advance the rule of law and the functioning of anticorruption institutions”.
The South Asian nation is one of the largest debtors to the IMF after Argentina and Ukraine. It also secured a 10-year, $20 billion financing package from the World Bank in January.
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