Pakistan secures $7 billion IMF loan with backing from China, Saudi Arabia, and UAE

Pakistan Secures $7 Billion IMF Loan with Support from China, Saudi Arabia, and UAE

Pakistan Economy: According to an International Monetary Fund (IMF) official, Pakistan has received “significant financial guarantees” from China, Saudi Arabia and the United Arab Emirates (UAE). These commitments extend beyond $12 billion in bilateral loans owed to the three countries, per Reuters.

The IMF’s mission chief for Pakistan, Nathan Porter, declined to specify the additional funding amounts, but confirmed that the guarantees were part of the newly approved IMF plan.

“I won’t go into details, but the United Arab Emirates, China and Saudi Arabia have made significant financial guarantees that have joined the project,” Porter said during a press conference.

The IMF’s Executive Board on September 26 approved a $7 billion, 37-month loan agreement for Pakistan. The agreement mandates “consistent policies and reforms” aimed at strengthening the country’s economic stability. As part of the deal, Pakistan will immediately provide $1 billion, the report added.

The IMF recognizes Pakistan’s impressive economic turnaround.
Having previously received IMF bailouts, Pakistan is currently enrolled in its 23rd program since 1958. Porter noted that although these kinds of interventions are common, the nation’s recent economic performance has been impressive. “Pakistan has staged a ‘truly significant’ economic turnaround from mid-2023,” he said.

Porter emphasized the necessity of ongoing efforts to maintain sustainable growth and credited these benefits to wise policy choices. The speaker emphasized the significance of stable monetary, fiscal, and exchange rate policies. “So what we have seen are the benefits of having good policies,” he stated.
He also pointed to the need for higher tax revenue and efficient public spending.

Last year Pakistan achieved its first primary budget surplus in two decades, and the IMF plan aims to increase this surplus to 2 percent of GDP. According to Porter, this goal can be partially met by improving tax collection from less taxed sectors such as retail.

The next review of Pakistan’s IMF loan program is expected in March or April 2025, following a performance review at the end of 2024.