ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have reached a three-year, $7 billion aid package agreement, the Washington based institution announced on Saturday morning, giving much-needed respite to the South Asian nation.
The new package, which needs to be validated by the IMF’s Executive Board, should enable the country to “cement macroeconomic stability and develop conditions for stronger, more inclusive and resilient growth,” a statement said.
Faced with long-lasting mismanagement, Pakistan’s economy has found itself on the brink, challenged by the Covid-19 pandemic and record flooding in 2022.
During the 2024-25 financial year, the government of Pakistan aims to increase about $46 billion in taxes, a 40 per cent increase from 2023.
“The programme aims to capitalize on the hard-won macroeconomic stability obtained over the past year by furthering efforts to strengthen public finances, decrease inflation, rebuild external buffers and remove economic distortions to spur private sector-led growth,” the IMF statement stated, citing Nathan Porter, the IMF’s mission chief to Pakistan.
“In this connection, the officials plan to increase tax revenues through measures of 1.5 per cent of GDP in fiscal year 25 and 3 per cent of GDP over the programme,” it added. It said that the authorities remain committed to undertaking targeted subsidy reforms and replace cross subsidies to households with direct and targeted BISP support.
Continued strong financial assistance from Pakistan’s development and bilateral partners will be critical for the programme to achieve its targets, the statement added.
Earlier, Pakistan’s Finance Minister Muhammad Aurangzeb hinted that an agreement between IMF and Pakistan would be reached, in the current month. Aurangzeb’s statement came while replying to questions of the media following the meeting of the National Assembly Standing Committee on Finance.
