IMF approves $7 billion funding agreement for Pakistan | Business and Economy Updates

The International Monetary Fund (IMF) has approved a new $7bn loan for Pakistan, which Prime Minister Shehbaz Sharif hailed as a success after months of negotiations. The loan comes as the country faces an external debt of over $130bn, with a significant portion owed to China. Repayment of nearly $90bn is due over the next three years, with the next major payment expected by December. Pakistan has relied on support from China, Saudi Arabia, and the IMF to meet its financing needs. The government has committed to increasing tax revenue in line with IMF requirements, despite protests over new tax schemes and high electricity rates. Pakistan has a history of economic crises, having received 22 IMF bailouts since 1958. The most recent economic crisis, exacerbated by high inflation, led to a sovereign default scare last summer, prompting the IMF bailout. However, inflation has since eased, and credit ratings agency Moody’s has upgraded Pakistan’s ratings due to improving macroeconomic conditions and government liquidity. The approval of the new IMF loan provides some relief for Pakistan’s economic woes, but the country still faces challenges in managing its debt and implementing necessary economic reforms.

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