Pakistan Economic Crisis: Support from IMF set to continue

Pakistan's caretaker Finance Minister, Shamshad Akhtar, has stated that despite some improvements, the country's economy remains fragile. She emphasized the need for strong financial reforms to bolster the economy and mentioned that additional IMF loans are necessary in the near term. Akhtar highlighted the importance of another International Monetary Fund (IMF) program, stating that it is crucial until the country can boost exports and domestic resources.

Following the conclusion of a review of the ongoing USD 3 billion stand-by agreement with the IMF, a staff-level agreement has opened the way for Pakistan to receive USD 700 million in the second tranche. Akhtar stressed the necessity of undertaking long-standing reforms, stating that the country cannot survive without them. While acknowledging the potential need for another Extended Fund Facility (EFF), she cautioned that it might be premature to discuss it.

Akhtar's immediate priority is to work on the last USD 1.1 billion tranche under the current facility to ensure a smooth transition for the new government. She outlined key aspects of the IMF agreement, including the government's commitment to regular tariff adjustments, controlling costs, privatizing the management of electricity and gas sectors, and institutionalizing campaigns against power and gas theft.

Addressing concerns about the external financing gap, Akhtar expressed confidence in achieving the tax collection target. She affirmed the government's commitment to fiscal consolidation for macroeconomic stability and balanced growth.