IMF approves $7 billion loan to cash-strapped Pakistan
What's the story
The International Monetary Fund (IMF) has approved a $7 billion loan for Pakistan, aiming to bolster the country's struggling economy.
The funds will be disbursed over a 37-month period, following an agreement reached between the two parties earlier this year.
Prime Minister Shehbaz Sharif expressed his gratitude toward Kristalina Georgieva, the head of the IMF, and her team for their approval of this crucial financial aid.
Loan prerequisites
Pakistan fulfills IMF's 'strict' conditions for loan
The loan approval comes after Pakistan successfully implemented what Sharif described as "strict" conditions set by the IMF.
He confirmed that all lender's prerequisites were met with assistance from China and Saudi Arabia, without specifying the nature of their support.
As of this month, Pakistan's external debt exceeds $130 billion, with nearly 30% owed to China.
The country is scheduled to repay almost $90 billion over the next three years.
Economic challenges
Pakistan's economic struggles and IMF's criticism
Pakistan has been grappling with economic instability for decades, resulting in 22 IMF bailouts since 1958.
The country is currently the IMF's fifth-largest debtor, owing $6.28 billion as of July 11.
Despite recent improvements in macroeconomic conditions leading to an upgrade in credit ratings by Moody's, the IMF has criticized Pakistan for its persistent vulnerabilities and structural challenges, including a difficult business environment, weak governance, and a narrow tax base.
Economic potential
IMF's concerns over Pakistan's economic potential
The IMF has also expressed concern over Pakistan's limited economic potential due to insufficient spending on health and education, as well as inadequate infrastructure investment.
These factors have not only perpetuated poverty but also left the country vulnerable to climate change impacts.
At the same time, the global lender commended Pakistan for key steps taken toward restoring economic stability, including rebounding growth and single-digit inflation.
The South Asian nation has promised that this will be the last loan from IMF.