ISLAMABAD, July 13 – Pakistan and the International Monetary Fund (IMF) have agreed on a new US$7 billion loan programme to stabilise the fragile economy of the South Asian nation, reported German news agency dpa.
The new 37-month deal is “subject to approval by the IMF’s Executive Board,” the IMF said in a statement.
“The programme aims to capitalise on the hard-won macroeconomic stability achieved over the past year by furthering efforts to strengthen public finances, reduce inflation, rebuild external buffers, and remove economic distortions to spur private sector-led growth,” the statement said.
Pakistani authorities have agreed on reforms to broaden the tax base and remove exemptions while increasing resources for critical development and social spending.
The government of Prime Minister Shehbaz Sharif is facing criticism after it presented a tax-heavy budget, rejected by the opposition led by the party of former prime minister Imran Khan.
Pakistan initiated discussions with the IMF for a new loan shortly after completing a US$3-billion programme that helped the country avoid a sovereign debt default last year.
His team started the groundwork soon after the February elections. The government took unpopular decisions particularly an increase in power prices which triggered protests.
Sharif’s government says it inherited the economic crisis from the previous government of Imran Khan whose policies pushed the country to the brink.
The government is struggling to tackle soaring inflation, a heavy debt burden, unemployment, and high electricity and gas prices.
