PakStox Outlook

Pakistan: IMF Reaches Staff-Level Agreement The Pakistani authorities and the IMF have reached a staff-level agreement on a 37-month Extended Fund Arrangement (EFF) worth approximately US$7 billion, pending approval by the IMF's Executive Board and confirmation of necessary financing from Pakistan’s development and bilateral partners. (12 July 2024) The program aims to build on last year's macroeconomic stability by strengthening public finances, reducing inflation, rebuilding external buffers, and removing economic distortions to encourage private sector growth. Key policy goals include: Sustainable Public Finances: Gradual fiscal consolidation through tax reforms and increased resources for development and social spending. FY25 budget aims for a 1% GDP primary surplus, supported by fairer taxation and expanded social protection. Federal-Provincial Fiscal Balance: A National Fiscal Pact reallocates spending responsibilities, enhancing provincial tax efforts, including harmoniz...

Pakistan is among the highest recipients of IMF loans. However, it is important to note that Pakistan's IMF debt as a percentage of its GDP is the lowest among comparable countries. The top three recipients all have larger economies than Pakistan and a debt-to-GDP ratio of more than 3%, whereas Pakistan's ratio is less than 2%. Debt-to-GDP ratio is a measure used to assess a country's ability to pay back its debt relative to the size of its economy. A lower ratio generally indicates that a country is managing its debt more effectively compared to its economic output. For a broader meaningful comparison, it is essential to exclude Argentina and Ukraine, as they are special cases due to their unique economic and political circumstances. Additionally, smaller African countries should be left out of the comparison because their economic contexts differ significantly. ( IMF data ) This leaves Egypt as the most relevant country for comparison. Egypt, like Pakistan, has a geopolit...

The International Monetary Fund has made several agreements with Pakistan over the years. Here's a brief on the latest ones. The current, Extended Fund Facility (EFF) Arrangement (2019-2023) : The IMF approved this program in July 2019. It gives Pakistan $6 billion in financial assistance. The goal is to support Pakistan's economic reform program and help with the country's balance of payments problems.