The International Monetary Fund has agreed terms with Pakistan on a six-billion-U.S.-dollar loan package, after months of talks and negotiations.Confirming the deal on Sunday evening, the IMF posted on its website details of a “39-month Extended Fund Arrangement,” with the six-billion-dollar loan aiming to support an “ambitious macroeconomic and structural reform agenda.”The loan agreement comes one month after the resignation of finance minister Asad Umar, who had voiced opposition to reaching out to the IMF for financial support.His replacement, Abdul Hafeez Shaikh, told Pakistani state media on Sunday that “there will be adjustments involved but we will try to make certain that the extent of pain on low-income people is minimal.”Prime Minister Imran Khan had also looked to resist seeking support from the IMF, after seeing his country receive 12 bailout packages in the past 30 years.However, economic problems increased through 2018, with Pakistan’s currency falling in value by more than a third since the end of 2017.
VCG PhotoThe IMF said Sunday that Pakistan’s authorities recognized that the country is “facing a challenging economic environment, with lackluster growth, elevated inflation, high indebtedness, and a weak external position.”Inflation has surged beyond eight percent, while the IMF’s outlook for Pakistan’s GDP growth in 2019 is 2.9 percent – a significant slowdown from last year’s 5.2 percent.According to the State Bank of Pakistan, the country’s total debt and liabilities had reached 86.4 percent of GDP by the end of 2018.The IMF posted on its website that the agreed loan would look to support authorities in reducing internal and external imbalances, “improving public finances and reducing public debt through tax policy,” while implementing a “comprehensive plan for cost-recovery in the energy sectors and state-owned enterprises.”The IMF underlined that its package would look to work in tandem with Pakistan’s international partners, saying their support would be “critical to support the authorities’ adjustment efforts and ensure that the medium-term program objectives can be achieved.”Pakistan is a key partner with China on the Belt and Road Initiative, with the China Pakistan Economic Corridor (CPEC) representing billions of U.S. dollars’ worth of investment into energy and infrastructure development projects.Prior to Khan’s arrival in China for the second Belt and Road Forum last month, Chinese Ambassador to Pakistan Yao Jing said that CPEC was entering a new stage, which would see “ greater involvement of private sector, social sector cooperation, and the involvement of third-party partners in CPEC projects.”
