Pakistan receives IMF $1.1B loan to boost economy

Pakistan will receive a $1.1 billion disbursement from the International Monetary Fund (IMF), marking the second and final tranche of a $3 billion standby arrangement secured last summer, Prime Minister Shehbaz Sharif announced on Tuesday, according to Reuters.

This funding is expected to bolster Pakistan’s economic stability and prevent a sovereign default.

Sharif’s announcement came a day after his discussion with IMF Managing Director Kristalina Georgieva about a potential new loan programme. Pakistan is seeking a larger, long-term Extended Fund Facility (EFF) agreement with the IMF to help achieve macroeconomic stability and implement crucial structural reforms.

Finance Minister Muhammad Aurangzeb indicated that a staff-level agreement on the new programme could be reached by early July. However, the exact amount sought remains undisclosed.

If the new loan is secured, it would be Pakistan’s 24th IMF bailout. This comes as the country’s $350 billion economy grapples with a chronic balance of payments crisis, with nearly $24 billion in debt and interest repayments due over the next fiscal year, three times more than its central bank’s foreign currency reserves.