After a long discussion IMF finally approves the loan request of Pakistan by approving a long 37 months disbursement loan of $7 billion with a immediate disbursement of $1 billion but IMF added some of the most rarebit conditions for the approval of this loan. Conditions that no country would agree by putting their citizens jobs and employment at risk. IMF provided $7 billion loan to Pakistan in which a $1 billion is given immediately and remaining will be paid in upcoming 37 months.
Why did Pakistan’s loan was approved?
Pakistan aroused as the nation of beggars as Saudi Arabia also warned Pakistan to limit the numbers of beggars to Saudi Arabia.
IMF did not approved loans easily instead it set some limits for a country which applies a loan application. In case of Pakistan condition was to improve the economic activities by decreasing the expenditures of government and also by reducing the inflation rate.
IMF’s rarebit conditions for the loan approval of Pakistan
The International Monetary Fund (IMF) has imposed several conditions on Pakistan as part of a loan program designed to stabilize the country’s economy and ensure better management of its debt. These conditions require Pakistan to make structural reforms, such as improving its tax collection system, expanding the tax base, and increasing transparency and accountability in how it handles public finances. Pakistan is also expected to strengthen its measures against money laundering and terrorism financing.
To maintain fiscal discipline, Pakistan must reduce its fiscal deficit to 2% of GDP by 2025, raise its tax-to-GDP ratio to 14.3% by the same year, and implement a medium-term strategy to boost revenue. In terms of monetary policy, Pakistan needs to keep a market-driven exchange rate, increase interest rates to control inflation, and improve the way its monetary policies are implemented.
The energy sector is also in need of reform. Pakistan must lower the circular debt within the power sector, adjust electricity tariffs to reflect actual costs, and enhance governance in the energy industry. For debt management, the country is required to reduce its public debt to 60% of GDP by 2030 and adopt better debt management practices.
Additionally, the IMF has directed Pakistan to strengthen social protection programs, improve the business environment, and reinforce institutions and governance. The loan is divided into tranches, with each payment depending on Pakistan’s progress in implementing these reforms.
Pakistan has committed to passing laws for tax reforms, reducing circular debt, and increasing the transparency of state-owned enterprises. The loan amounts to $6.5 billion under the Extended Fund Facility, with a 37-month duration and an interest rate currently around 3%, though these conditions may change based on Pakistan’s evolving economic situation.