PM hopes IMF deal Pakistan's final loan agreement

Shehbaz Sharif says time has come 'to free ourselves from the burden of debt'

Prime Minister Shehbaz Sharif confirmed a staff-level agreement with the International Monetary Fund for $1.2 billion disbursement and expressed hope that it would be the last such program for Pakistan.

Chairing a cabinet meeting on Thursday, he said the time has come “to free ourselves from the burden of debt”. Hard work is the first condition for national independence and dignity,” said Shehbaz, adding that Pakistan’s economic stability would strengthen its global voice and respect.

 

The IMF on Wednesday announced the agreement for the release of $1.2 billion next loan tranches after Islamabad, for now, agreed to the old pre-floods budget targets and to publish the governance report before the board meeting.

Upon approval by the board, Pakistan will have access to about $1 billion under the EFF and another $200 million under the RSF, said Iva Petrova. Cumulatively, the IMF will disburse $3.1 billion under the EFF out of the $7 billion deal.

Read More: IMF unlocks $1.2b after govt revisits pre-flood pledges

Pakistan and the IMF negotiated for three weeks to reach a staff level agreement. One of the irritants was the lack of finalization of the fiscal numbers reflecting the impact of the floods on the budget.

 

Moreover, the IMF on Tuesday projected Pakistan's economic growth rate at 3.6% for the current fiscal year, as Finance Minister Muhammad Aurangzeb expressed hope that a staff-level agreement with the lender for two tranches worth $1.2 billion would be reached this week.

The IMF released the World Economic Outlook report from Washington, pitching Pakistan's economic growth rate at 3.6%. But it clarified that Pakistan's economic "projections do not yet reflect the impact of flooding in summer 2025, whose impact is still being assessed".

Also Read: IMF projects Pakistan's growth at 3.6%

The adverse implications of the floods on the economic growth, inflation, budget and external sector are one of the outstanding issues hampering the finalisation of the staff-level agreement for the completion of the second review of the bailout package, according to the government sources.

Contrary to the forecast of 3.6% economic growth, the sources said that during the last week's inconclusive discussions, the IMF staff had projected 3% to 3.5% growth.

They said that the IMF's view was that the recent floods have weighed on the economic outlook, particularly for the agriculture sector given the damages to major Kharif crops.

The government has already downward adjusted its 4.2% ambitious target to 3.5% while the World Bank has made a forecast of 2.6% for the same reason.