The International Monetary Fund (IMF) has released the first $1 billion to Pakistan after approving a $7 billion loan package. This loan will be available to Pakistan over 37 months.
In their statement, the IMF reported that Pakistan’s economy is growing at a rate of 2.4%. However, the country still faces big problems, including a tough business climate, weak governance, and a small tax base.
The IMF mentioned that Pakistan has been following important policies over the past year to stabilize its economy. The growth rate of 2.4% for the fiscal year 2024 is mainly due to increased activity in the agriculture sector.
The IMF also noted that inflation has dropped to single digits. Good fiscal and monetary policies have helped manage the current account deficit and rebuild foreign exchange reserves. This drop in inflation shows improvements in both local and international conditions.
Since June, the State Bank of Pakistan has cut the policy rate by 450 basis points, which has helped the economy. The IMF praised Pakistan for presenting a strong budget in June 2024.
However, the IMF pointed out that not spending enough on health and education is hurting efforts to reduce poverty. Low investment in infrastructure has also limited the country’s economic growth. Additionally, Pakistan is at risk from climate change.
The IMF stressed the need for necessary reforms and warned that without changes, Pakistan might fall behind other countries. The success of the loan program will depend on ongoing support from development partners.